‘Local Content Is a Jewel for Indigenous Oil & Gas Companies’ – MD AOS Orwell

‘Local Content Is a Jewel for Indigenous Oil & Gas Companies’ – MD AOS Orwell
November 28, 2019 admin

The Managing Director of AOS Orwell, Femi Omotayo says ‘Despite Challenges in the Oil and Gas Sector, indigenous players have become more efficient over the years’. In this chat with Udeme Akpan, Mr. Omotayo is hopeful that the current upswing in crude oil prices will encourage more investment by local players. Excerpts:

 

Who is AOS Orwell?

AOS Orwell is one of the largest and well-equipped indigenous oilfield servicing companies in Sub Saharan Africa. We like to believe that ours is a company made by Nigerians, delivered by Nigerians and inspired by Nigerians. As a customer focused company, we are big on honesty and integrity, innovation and excellence. These four pillars run through everything that we do and everything that we are as an organization. It is little wonder why we rank top 3 in the indigenous oilfield servicing companies in Nigeria. We are so good at what we do that we have been able to distinguish ourselves in the areas of Wellbore Construction, Process Automation and Electrical services. We have often been described as a ‘one-stop-shop’ for integrated and specialized oilfield products, services and solutions across the oil and gas value chain.

There are many things that make this company unique from others some of which include

  • The ‘total-package’ model we run where we are able to take on projects of any scale from supply chain, all the way through to maintenance. So we source, deliver, monitor and maintain the entire process from start to finish. When we are done, we deliver a turnkey project that is world-class.

 

  • We are open to partnership and one of the things we have been able to successfully do is partner. We have a robust and committed team of partners in leading global organizations like Emerson, Eaton, Hoebiger, Metal One, Dettronics and so on.

 

  • We are truly indigenous, employing top-notch technology transfer to build local content across the entire scope of our operations. This way, we build the needed capacity in-country, harness it, grow it and pass it on down as a means of retaining the knowledge.

 

  • We are an equal opportunity employer, and frown seriously at discrimination against any employee because of race, colour, religion, nationality, sex or any other related tags.

 

  • We are an adaptable company with the ability to flex with the market. We can take a project on from any stage because we spot our clients problems and are well equipped to solve them.

 

  • We solve our clients pains, on schedule, according to budget and according to the quality they are expecting.

 

  • We are available online, real-time, meaning we offer round-the-clock customer/client support as part of our commitment to meeting our clients needs.

 

What differentiates you from other indigenous oilfield servicing companies?

One of the major things that stands AOS Orwell out from the crowd of other companies like ours is capacity. We build capacity and we have built this capacity phenomenally. We arguably have the largest capacity of any indigenous company within this industry in Nigeria, with the exception of the big EPC’s.

The other thing that stands us out is our backend infrastructure. At a time, we invested a lot in enterprise resource planning to be able to see every transaction, and keep track of the bottom-line. We keep improving on that till today! We deployed technology that cost us 1 million dollars to execute just for this purpose. The other thing that we also have going for us is compliance. Our standard of quality is world class and we are careful to make sure that we are compliant in every area that is required of us. We were the first company to have ISO Certification in 1998 about 21 years ago, when it was a relatively new idea and we were certified by British Standards. Up until last year, we were only observing British standards, but now we maintain those same British standards along with those of the SON. We are quite meticulous in our in our procedures, delivery, people, training and so on. We never compromise on that.

Also, we are extremely safety-conscious. Our safety procedures and observance is really exemplary. We are consistently safety award winners. We have won the Shell West African Award Safety Award once. We have won the Shell Safety drilling award, severally. Today, Shell and others bring their ideas to us. And when they have their safety day, there are just two companies they promote and we are one of them because we really spend a lot of time making sure that safety is not just about compliance, but that every one of us here at AOS Orwell believes that quality life is important. We are also committed to life after work.

 

 

When did the merger happen that brought AOS and Orwell together and what fueled the merger?

The company that is AOS Orwell today, was birthed out of a growth mandate as well as the recognition of a need. A need for an indigenous company, with the ability to provide integrated, end-to-end project management solutions in-country, within the full scope of the oilfield servicing industry. I came into Nigeria, in 2000, young, nimble and hungry to succeed. Along with some technology partners that migrated with me from abroad, I set up the company Orwell, where we started out from the very basics of selling engineering gear like boots, gloves and so on. After a year and a half, the Nigerian business climate proved unfavorable for my partners and so they took a decision to return to their countries. I also had a choice to make – return or stay. I chose to stay! I decided I would buy them out against the odds of not having enough money. But there comes a time in life when you need to step forward no matter what the wind brings, and weather it. So I initially bought the company, and later bought the assets.  Getting a loan in Nigeria at the time was nothing short of herculean and so, I really did not know where the money was going to come from, however, fate smiled on us and Statoil gave us the first set of jobs that helped in paying for the buyout. Things became a bit better with the 2006 consolidation of the banks in Nigeria. This gave us a bit more muscle as we had begun growing the company, and as such, required more funding. At this point, we went to private equity. We were approached by a few companies willing to invest, but we settled for Orius in 2006, having gone through several qualification stages which lasted approximately two years. Orius invested 4 million dollars in Orwell at the time and this really boosted our operations. In fact we quadrupled in size. At the time when Orius made the decision to invest, they had asked whether we were open to partnerships with any indigenous companies. The truth is we were very skeptical to partner with indigenous companies and our response was that ‘if at all we were really pushed to, it would be Africa Oil Services, AOS’. Two years down the line, Orius came back to us with a partnership deal from AOS. At the time, Orwell was growing at an alarming rate, with contract conversion rates of almost 100%. Fortunately, the merger took place in 2011. It was simply amazing and the first of its kind, where two local companies were willing to sail the same boat for the long hull. The merger now presented us with a huge contract book from AOS’ end and an equally huge personnel and equipment base from our end. I believe the merger caused the world to look at us differently, more like ‘this was a company that had the potential to merge with international companies, a company with financial strength, strong procedures, sufficient level of high quality management and brand.’ AOS on its own part felt secure in the partnership because of our determination to remain in the country and develop the business.

 

What are some milestones that set AOS Orwell’s footprints in the sands of time?

Being an indigenous company and operating in the sometimes difficult terrain of the industry here in Nigeria, we are so proud of some of the feats we have achieved. For instance, we are the largest fishing company in the whole of West Africa and this is not contested. We are also the largest Machine Shop in Nigeria, when you drill down to capacity and licenses. We have three machine shops, one in Trans-Amadi, Port Harcourt, one in Onne and one in Takoradi, Ghana. We also boast of quite a number of firsts:

  • We were the first indigenous oilfield servicing company to assemble drill bits in-country in 2010.
  • We opened the first internationally certified fishing training school in West Africa, in 2010 as well.
  • We also opened the first drilling jar certified service shop also in 2010. Today these jar shops operate even better than those of the OEMs.
  • In 2012, we opened the largest conductor casing and fabrication shop in the whole of the West Africa.
  • The following year, in 2013, we went ahead to open the first Instrumentation Cabinet Assembly Faciity in Onne.
  • We also went ahead to launch the first valve repair and maintenance centre in Nigeria in 2014.

There are so many others but these ones have really stood AOS Orwell out.

 

Let’s hear you on how Far you think Local Content has come, and its Impact on your business

The local content is a jewel for indigenous companies operating in Nigeria. With local content, what happened was that one day, somebody had an ‘aha’ moment, got a piece of paper and decided that this was the law. – The Local Content Act. That singular act built what we see today through the past nine years. For example, when I was growing up, I was told that Africans can’t make control systems, and I did believe. The reason I believed is that, it was so complex with thousands of wires coming at you and you have to make those wires behave and produce a result. So a lot of times, we have felt like we cannot do it. Today, when I walk into our workshop and see our local boys handling the wires, I get a good feeling. This is very encouraging and the industry has been very supportive. There is a lot of trust and belief in the system today. This has paved the way for investment to thrive. And there has been a lot of investment. Nigerian companies have invested heavily towards the growth and development of local content.

The respective local content body, the Nigerian Content Development and Monitoring Board (NCDMB), has also done extremely well in instilling trust and propelling positive actions in the furtherance of local content in Nigeria. They have also been very lucky in picking the right leaders. They really have never gotten this wrong. From its flagship leader, Ernest Nwankpa, to the current Executive Secretary, Engineer Simbi Wabote, each of them have been able to successfully capture what it takes to implement the policy on different levels and with the highest sense of transparency, even within an industry that housed a lot of skepticism about the workability of the local content act. The only challenge I believe is facing the industry now is that the projects are not coming at the rate we had anticipated. So we need to find a way to make the contracting life cycle faster.

For us at AOS Orwell, we have always been committed to local content even before the law backed it up. We have two world-class schools, one in Lagos, and the other in Port Harcourt where we train young indigenous engineers and help them build capacity in the areas of process automation and control and the other in fishing. At a time, we approached NCDMB to tell them we wanted to train Engineers, and they responded saying, it was not enough to train people, but training them to a job was where their concern lay. We were successful in partnering with the Lagos Energy Academy to train over 50 Engineers, with 60% of them having jobs upon completion of their programme, 4 of those jobs were with international companies. That programme is internationally certified by Siemens and runs continually, with different batches receiving hands-on training within a 6 month period.

All together, we are quite happy with the Local Content Act and we and we are extremely happy with what the leadership is doing and we give them our full support any day.

 

Do you consider this a ripe season for Oil and Gas players in the indigenous market?

Like I said before, it is only when we are able to look back, that we can appreciate how far we have come. There was a time when there were absolutely no Nigerian companies playing in this field. At some point, Nigerians were missing out hugely on project sharing. Gaius Obaseki was the first man to give us freedom. He started publishing the contracts before they were awarded. This gave Nigerians better insights into the contracts available on ground, and helped them stand a better chance of winning bids. That allowed for a bit of level playing field.

Then in terms of available funding, Soludo came and consolidated and made it possible for Nigerian banks to offer reasonable money. So we are gradually getting better. We now have Nigerians with off-shore rigs that actually work. We have Nigerians owning oil fields by themselves. So we can do it. The capacity is really increased now.

The outlook for Africa’s Oil & Gas Industry is really positive in the middle of troubled operating and economic headwinds. With oil prices steadily on the rise towards pre-collapse levels, internal and external conditions have arm-twisted oil and gas companies to be more efficient especially in the areas of cost. This no doubt, has impacted on the way indigenous companies in the oilfield servicing industry operate. Investors as well, now, more than ever, have an increased need for clarity and certainty in making key investments against this backdrop.

 

What are some of the innovations you have deployed using Artificial Intelligence (AI) within the Oil and Gas Industry?

The oil industry is a slow learner. It requires a very precise skill set. So it is not really yet robust in that aspect. But in terms of data, that is where you see Artificial Intelligence really shine. In drilling for example, you do not use AI. But in the plant itself, you use AI. For example, we have pervasive sensing so basically, this is the measurement in the field. Your transmitter can do a lot of oculus to remotely control what the engineers on the field are doing. You can identify the right transmitter remotely. It can also project the procedure needed to address the specific job being done per time. So definitely, Artificial Intelligence has its place even in a unique operating environment as we have in Nigeria because has allowed some significant efficiency within the field.

 

Please can you tell us about your 100m dollar facility in Port Harcourt and the local content outlook?

Our state-of-the-art facility in Trans-Amadi, Port Harcourt is world-class. The entire facility sits on a 56,000sqm land mass and hosts our corporate office, and the entire drilling and wireline services that we provide. In there, you also have our machine shop which is well-equipped with welding and fabrication capabilities. So right there in Port Harcourt, we build Control Systems, we assemble valves, we build switch gears, we build conductor casing, rotating equipment, skids and much more. So basically today, we have been able to domicile with that kind of money, a lot of services that predominantly used to be imported into the country. We equally have the local capacity to run the facility. That facility has been able to enable us do that, and we spend a lot of time training people. Most of them get poached, but we keep training.

 

Can you tell us some of the efforts of the company in giving back to the society?

For us at AOS Orwell, we strive to impact lives. The way I see it, if you don’t impact lives, work is meaningless. On the community side, we engage the community. Some of the things we do entail us giving quality man hours up to 16 hours per staff, going into schools across the different regions where we operate and mentoring the students across a wide range of topics. Some of us teach as well, while others engage in cleanup activities and other charitable ventures like donations to orphanage homes and so on. We also sponsor courses. Because we are practical in the impartation of knowledge, we are not so much interested in the numbers as we are in the overall impact we give. So for instance, where we would have taken on 100 people and trained them and sent them away with a head full of Engineering knowledge, we would take just four persons at a time and train them until they are able to take on jobs in specific areas, like control systems/fishing and so on. The day rate for a control systems engineer or a fisher on the rig is 400 dollars. This will mean a lot more than equipping someone to earn not more than 40,000 naira a month, even though that has its pace in the grand scheme of things.  In terms of the academy that we run, this summer we ran a programme called ‘Energy Stars’ which was a solar training programme for very young kids. We offered a subsidized course in solar energy and partnered with other willing companies as well as schools. The students were taught on solar power engineering among other things like thinking skills, problem solving skills and so on. They were also given practical projects to test their understanding of the subject matter and amazingly, they came up with advanced projects like solar-powered vehicles. Giving back to us implies meaningful impact and we are committed to it.

 

Are you going to be part of Train 7?

We will be working on the Train 7 project. We are partners with the winners (Saipem Consortium). So we can provide end-to-end services on the valves aspect of the project. We are working to offer enough value to be able to offer that one-stop-shop solution as far as it concerns valves. We are big enough to give the guarantees with both local and international manufacturing, infrastructure and partnerships in place. We will also be working with them on skids. So chemical injections and things like that. We will  work on electricals as well. We have our facility in PH that will handle LV/DV switchgears in-country. This will reduce cost, logistics and risk. Today, we are working with NLNG as we speak. We are working with their valves and the servicing of their valves for their facility. We bring a competitive advantage of being the designer and the user in that we have the crude knowledge and understanding from textbook, experience from the field. We are on Asa North where we are doing the control systems, the skids and the valves, we are looking forward to the Train 7 project because the capacity we currently run on is merely 30% against the 90% range we have the wherewithal to.

 

What other projects are you looking forward to?

Bonga South West is something we all are looking forward to. We are hopeful.

 

Are there major issues in the industry that affect your operations?

Tariffs on local content. We need to get the tariffing right. People say it is more expensive building locally, but that is a wrong perception. We have suffered the pains, we have put our necks out and we have seen that this is possible. So there is really a need to demystify the perception that building tools and products locally is more expensive. This way, taxation on imports for tools and products within the oilfield servicing industry, won’t be less expensive, about 25% lower than the same produced or sourced in-country.

 

In a Cap, what are your services?

First thing is this, we are solution providers. We invariably have solutions for a wide range of problems within the oilfield servicing industry. If you approach me with a problem, 8/10 times, I will have a solution.

We have three verticals: We have what we call the Well Construction Division, Process Management Division and a sub company within the AOS Orwell Family, Oil Tools Africa. Across these three divisions, we offer a wide range of services including: Casing and Tubular running services, Instrumentation, Drilling services, Downhole Tools and Fishing Services, Metering Skid Solutions, Integrated Control Systems Cabinet Assembly, Electrical and Power Solutions, Wireline Services and Valve Asset Management services. This is why we consider ourselves a dependable partner offering one-stop-shop solutions in the oilfield servicing industry. So if you give us your well we can offer full bundle services (turnkey services) very easily because we are well equipped.

Most of what we do and who we are is possible because we have a robust repertoire of partners. This is a very unique asset that really changes the game. If you look at the list of companies that we partner with the likes of Eaton, Emerson, Hoebiger, and so on, it’s like the Pantheon of Who-is-who in the oil field services industry globally. We can partner with them especially because we maintain high standards of compliance and we live by the uncommon values of being honest, open and frank. In the most difficult times, those values have really helped us. We also try and serve our customers every time continuing to push the frontiers, doing new things. More importantly, we will continue to be the best we can be in being proudly indigenous and delivering world class solutions.

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