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Oil industry operators lament dearth of projects

By Hector Igbikiowubo
OIL and gas industry operators, particularly the engineering and fabrication sub-sector have lamented the seeming dearth of projects to sustain their operations, noting there is the risk most yards in the country may shut down and lay off staff next year if no jobs are forthcoming anytime soon.

Minister of State for Energy
Minister of State for Energy

A Managing Director of one of the foremost fabrication yards who insisted he had to remain anonymous said the processes leading up to the award of contracts in the oil industry have come to a standstill owing to the air of uncertainty brought about by the debate over the petroleum industry bill.

“Most of the projects which the government had on the drawing board have either been suspended indefinitely or delayed under one pretext or the other. Nothing is happening regarding Nsiko, Bosi, Bonga North/West, Bonga South/West, Aparo, Olokola LNG and Brass LNG,” he lamented.
He explained that these are multi-billion dollar projects which government pushed vigorously under the Olusegun Obasanjo administration, forcing most fabrication yards to expand capacity.

“Most of us borrowed millions of dollars from the banks at high interest rates which has today become an albatross. If the current situation persists, most of us will be forced to lay-off staff next year and close shop,” he said.
The managing director also identified the insecurity in the Niger Delta as a major issue and urged all tiers of government to ensure that the amnesty package is fine-tuned to achieve success.

“Can you imagine the implications of the amnesty package not working out successfully? The implications are that the atmosphere of insecurity will persist, the multinationals cannot operate, government revenue will dwindle even further and the oil service sector which is already badly hit by the atmosphere of insecurity would be crippled irredeemably. It is certainly not a prospect to wish for.”

Also speaking at the load-out of the multi-billion dollar Usan FPSO topside, a first for the fabrication industry in the country, Mr. Mansour Jamakani, an executive director of Jagal noted that, ‘it has been an extremely difficult and trying times’.
“We are living from hand to mouth; we are really suffering, pure and simple. Continuity is the most important thing because it helps us to right-size our investment, our work force and our scheme of operation,” he noted

He said there was nothing limiting the engineering and fabrication sub-sector of the industry from growing three to four times the current size, provided there is sustained patronage from the joint venture operators and PSCs.

“Unfortunately, due to restructuring, due to whatever that is happening within the industry, we are the first to feel it. This is because the engineering firms and the fabrication firms are at the beginning of this project. They were here when the project started, they are the heartbeat and if the heart does not beat continuously, there is no end product that is going to live and produce whether it is a deepwater production platform, an FPSO, a subsea facility or tieback.

At the end of the day, it all starts with the engineering, it all starts with fabrication and those two parts of the industry are the first to feel the pinch when there is no continuity of work,” he said.

To further underscore the disquiet in the sub-sector, late last month, changes at the Nigerian National Petroleum Corporation (NNPC) saw Musa Bamanga, the general manager in charge of Nigerian content development moved to head the engineering and technical department.

Curiously, no replacement was announced in his stead, leaving the sub-sector with the impression that the corporation was no longer driving the policy.

However, the corporation was quick to issue a statement re-assuring that while the ministry will drive policy initiative, it was till poised to drive implementation.


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