By Ediri Ejoh, Houston Texas
Emeka Okwuosa is the Executive Chairman of Oilserv Limited, Frazimex Energy Services Limited, Frazimex Engineering Limited, Frazpower Limited and Frazoil Limited. He is not only an engineer involved in the construction of high-tech industrial facilities, he is also a farmer with a thirst for solving Nigeria’s food insecurity nightmare through his company, Excel Farms Limited. In this interview with Vanguard, he explores possible way out for the country in its bid to grow the economy and navigate a successful energy transitioning.
Please can you share with us the rationale behind Oilserv’s participation in the OTC and your thoughts on energy transition and the capacity to be able to transit?
The aim is usually to be able to interact with the rest of the world on issues that concern oil and gas and by implication, energy. And we heard today during the comment session which we sponsored… We usually sponsor this season every year to share our view with other OTC attendees. This year, the focus is on energy transition and how it impacts the growth of Africa, if you may put it that way.
Oilserve Group as an organization consist of six companies. The Group’s business transit the oil and gas and energy industry to other sector such as agro business. For instance, one of the companies which go by the name ‘Ekcel Farms Limited’ is a company that is involved in agriculture. And agriculture for us is not just about farming; it is about the processing of the products. We have our primary feeds – cassava and tomatoes.
We are trying to develop cassava at the moment. Part of the reasons for this is not to only provide for the teeming population of Nigeria but also to provide products or feeds that can be used in the pharmaceutical, and other food industries.
What that means is that it helps us to balance our footprints in the energy industry. Because one of the aspects of our foray into agriculture is to be able to generate power that we use for agriculture by using biomass and biogas, taking the waste and then converting it to energy. That again helps us to address our carbon footprints.
Having said that, if you look at the energy sector in the world – if you look at oil and gas – you will see a lot of discussions ongoing. There is an energy transition, it’s been ongoing. You listen and they tell you about Net-Zero goals, 2050 targets and all that. We put out all kinds of statistics. At the end of all this, the important question is how do we sustainably leave this world? That is the bottom line.
For us to live in this world, we need energy. And like I stated at the panel session, countries and people never developed except by increasing the amount of energy that is available and the amount of energy that can be used.
There is a direct correlation between energy transition in any country and in any locality and the GDP of that country. By implication, the quality of life and the level of development of the economy. So you cannot say let us stop greenhouse emissions, climate change effects, and the impact of human footprints on the Earth, by eliminating human beings or by stopping the use of fossil fuels.
No. It’s about how do you sustainably replace fossil fuel utilisation without damaging our ability to sustain life. And when you talk of sustenance of life, there is a gap. That gap is between what you see in the developed world where the transition is easier to manage because they have, by and large, the finance, and the funding to be able to manage that transition.
Put that side by side with the scenario in Africa where we are still trying to grow – still trying to get out of poverty. To do that, we need to develop our energy base, utilize our energy base to build our economy. So it is a balance that has to be made.
Nigeria, I will say, has done quite a lot in trying to develop its Oil and Gas Industry. We’ve done positive things and we’ve made our mistakes. We have since realised that gas should be the mainstay of our energy delivery. But you cannot talk about gas without infrastructure. Gas is not like oil.
You can produce crude oil and put it in tanks, leave it there for as long as you want, and then move the tanks when you want. But when you think of gas production, from the day you are thinking about it, you should also be thinking of the infrastructure to move that gas. Because you can only store a small quantity of gas and that depends on how you can even store it – at what pressure how do you contain it? It’s inconceivable that you want to store the gas that you are producing. For you to use gas, you either build pipeline systems that include all the facilities that go with it.
The pipeline here is not just a piece of pipe. You build the infrastructure, including stripping the gas, being able to move the gas into its various constituents like the LPG and all sorts. Then you now move these to places where you use them.
You must match production which utilisation, otherwise, production has to shut down. Another way that enables us to move gas on a larger scale is the Liquefied Natural Gas. But that is mostly for utilisation in moving this gas far away from sources of production.
For instance, Nigeria produces, gas converts it to LNG and moves this gas to as far as Australia. So these are ways to move gas. Gas utilisation depends on infrastructure and that is where Oilserve is located very strongly, apart from other businesses we are doing in the industry.
We have built more than 70 percent of all gas distribution systems in Nigeria. Currently, we are executing half of the Ajaokuta-Kaduna-Kano Pipeline which is 40 inches by 614 km. We are executing 303 km of the 40 inches plus another 15 km of 24 inches, to supply gas to a power plant that is envisaged to be built in Abuja.
Make no mistake, this is part of the Nigerian Gas Master Plan. And what is the Nigeria Gas Master Plan? It is a master plan conceived by the NNPC to move gas within Nigeria and achieve domestic gas utilisation plans. You have the Western flank of it which is the Escravos to Lagos Pipeline which is already in existence as we speak.
It has been a second loop of 36 inches line built. You have the Obiafu-Obrikom-Oben (OB3) Gas Pipeline which is the largest pipeline in terms of diameter. It is 48 inches in diameter between Obiafu and Oben.
We have built that and commissioned our portion, that is, an interlink between East and West. You may wish to know that a lot of the gas that exists in Nigeria today lies between what we call ‘South-South’ and ‘South-East’.
But gas utilization is all over Nigeria. So the only way you can use this gas is to build pipeline systems that will help to move this gas. So this interlink is important. We are building the AKK Pipeline but on the back of that is completion of the South Pipeline which is Qua Iboe Terminal of ExxonMobil, through Obi Igbo Road, then through Umuahia, Enugu, all the way to Ajaokuta. That field is important. That is already being conceptualized as we speak.
When we finish AKK, that angle will come in and that will make up the backbone of the Nigeria Gas Master Plan. The rest will just be distribution lines or trunk lines, say from Zaria to Sokoto, Kano, Maiduguri. And like we are planning to execute now within the South East – to move gas to Onitsha, Nnewi, Owerri and the likes. All that will be done. Plans are underway.
Already, Lagos is fed. And as I mentioned, we built the entire gas distribution system in Lagos. There’s another concept to move gas from Shagamu to Ibadan, Ilorin and Jebba. All these form the gas distribution system.
The need for gas development
Nigeria needs gas to develop. And when we talk of the energy transition, we have to transit from oil-based energy supply, which is the crude oil itself and the constituents that come out of refining (whether it is HPFO or LPFO, diesel, AGO, petrol, kerosene) to gas-based supply.
Gas is cleaner, gas is more available in Nigeria. It is not just available, it will last a long time for use in Nigeria.
So if we move to gas, it would be easier for us to transit into renewables. I am not saying we shouldn’t go into renewables, we should. But we should pay stronger attention to gas distribution because that is what can change the face of Nigeria’s energy delivery system.
My point is that our coming to OTC enables us to share these ideas with various parties and be able to learn a lot and interface, get access to technology and what have you. I’m glad you are all here and I thank you for being here.
On time deliverables of the AKK project
Let me start by re-echoing the concerns that we put out there when the conversation was going on. What is the focus of all of these things you have discussed? Is it that of speed or value? Because there seems to be a Nexus that appears to be tied: is it that of speed or value or trying to carry both of them along? Because, if you try to pursue all or any of these without carrying along with the people for which this value or speed has been created, then you would have ended up almost weaning the dock.
If you lead this conversation on behalf of yourself and behalf of Nigeria businessmen, of course, in the oil and gas sector to an international conference like this, what would be the biggest message coming from you about what Nigeria intends to achieve this year’s OTC, considering that we are asking the rest of the world to allow us to use gas as a transition fuel, together with all of the intricacies around it?
When you talk about speed, you also talk about availability. It’s a mix. There’s no hard and fast rule about this – it’s about a country like Nigeria having a clear strategy. That strategy is determined by our economic plan and our direction as a nation.
In this world, in as much as we know that everybody is important, there are policymakers and there are also drivers of policies. That is why we have government and we have systems in place. The system tries to articulate what is best by interacting with people, businesses and with what is out there to be seen, putting all that together and being able to project what is best for Nigeria.
The most important thing is execution. Execution is key because you can make any plan you want and you can speak any language you want, if you are not capable of executing, it is like pushing a dead ox. If we talk about energy transition, I have said it and will continue to say it, we must put that in perspective as far as it concerns Nigeria. It is not about how fast we get there; it is about having a robust sustainable system that, at the end of the day, will give Nigeria the ability to develop as we should.
That is important. Some people have argued whether OTC is relevant – whether we should continue coming to OTC or not. I said yes we should. When we are here, we do not only share our position with the rest of the world, we also learn from them and see where the pressure points are.
We also take the advantage to be exposed, if you wish, to new technologies, new ideas and then share these ideas with other participants here. You may wish you know that, as we speak about energy transition and energy, what is key is finance. To put it in perspective: when you look at exploration and production (not only in Nigeria- it is an industry standard all over the world), where does the finance come from? You may have huge reserves in Nigeria, you may be producing 2 million barrels a day, let’s just assume. How do you get to that? You have to invest upfront in exploration, in development and then keep your reserves managed properly. For that to happen, you need money.
We are not able to provide the level of finance required, in Nigeria. So most of this finance is coming from outside Nigeria. What it means is that our policies can easily be affected by the financiers. You may wish to know that, for the past three years, it has been difficult and talk about financing oil and development in Nigeria and Africa. I know of a bank in France that made a point of refusing to finance a gas pipeline from Uganda to Tanzania.
It is a primary bank that has been financing most of Total’s activities. But at this point, they said no, their new policy does not allow them to do that. You can’t force them – it is their decision. But the point is: you now see we (Nigerians) are not an Island. Even when we have the oil beneath us, we can’t produce it without interfacing with the rest of the world. So whatever policies are existing out there, we have to find a way of managing them to our advantage.
The other learning point here is that we are the ones to push for energy security – nobody will push for energy security on our behalf. Without energy security, you are going nowhere in terms of development. The world will move on. If you look at the powerful countries in the world today, what defines them are the availability of energy and the utilisation of that energy in large quantities.
I know some time ago, about 10 to 5 years, America was consuming close to 25% of the total energy consumed in the world. Tell me, what is the population of America? Less than 300 million. But that defines the United States of America, and that is why you move around here you don’t see power failures. Everything is working seamlessly. It is energy that is driving that.
When energy is available, businesses will develop. And when you have energy availability at a good rate which happens when you have a balanced demand and supply, then you find out that you have a sustainable energy system. Nigeria has to learn a lot from that because, no matter what we are doing, we should pay attention to our energy security. What is going on in gas distribution is very good, but we have to sustain it. We have to make sure we carry out the policies and execute these policies very well. These are two key points.
What is your company’s strategy in terms of keying into the energy transition agenda? What should we expect to change in terms of the operations of Oilserve going forward?
We have already keyed into that. We have a clear strategy. Apart from developing it, we sensitize people about it and review it regularly. Earlier, I mentioned that Oilserve has six companies in the group. The one which is the flagship in the pipeline engineering and construction company, Frazimex Engineering Ltd. But that is not all we do.
We are into gas development right now. We are working to build gas networks, built locally, and then operate. That means that we are already trying to address the issue of energy availability within our group. We are also working on our agricultural subsidiary. It’s ongoing. As we speak today, one of our companies is working closely with NNPC.
There is a tender going on, on how to correct the moribund distribution systems for products. We see them all over Nigeria. They are not functional. But we want to buy them over, rebuild them, and make energy available, instead of having people transport petrol and diesel from Port Harcourt to Makurdi, for example. Does it make any sense?
There is a pipeline built many years ago but it is not there anymore because it has been damaged and not maintained. We are also addressing that. We’ve also gone into renewables. We are not, at this point, developed in renewables. But we have a partnership with a German company, to be able to address the renewables, solar or whatever.
We are more concerned about how we can utilize the principle of both green and blue hydrogen.
We want to be able to generate power without having to damage the environment. So we are already moving into that sector. But going into the new phase of energy delivery takes a lot of time to plan and a lot of investments. And like I said, if you look at Nigeria we also have some issues.
Most of the countries in the world that have developed and are still developing have frameworks to encourage these developments, by way of tax rebates, addressing price issues to make sure that entry points, in terms of costs for these alternatives, will not be too high.
Unfortunately, we don’t see any articulated situation like that in Nigeria. What that means is that there is no encouragement for any investor to come into that as a business because he cannot compete today in terms of pricing with fossil fuels. But we cannot give up: it’s about engaging the government, it’s about pushing because we have no choice. If we don’t, the train will keep moving and we’ll get to a point where our oil is there but we cannot produce.
It is our duty as a country to make sure we can refine the crude oil we use. We can do that. Nigeria’s utilisation is high enough to absorb about a third of our production. That, again, will speak to energy security. When we have to go and import petrol, AGO and all that, it shows we don’t have the security. It means that we can be shortchanged. So we are looking into distribution systems in Nigeria, and these are the things we are doing strategically.
Shed more light on some particular policies you just spoke about, like the entry point issue. What’s the multiplier effect of these policy and what figure in terms of money will it cost the government
Let me first say this on a positive note. This current government of Nigeria has done quite a lot of things for which it has not been given credit. When President Muhammadu Buhari came into power AKK Pipeline was already under discussion since 2009 – it’s never moved anywhere. Within 2-3 months of coming into power, he brought the issue up and said that it must be done. His government gives us the support to navigate that process, especially the funding.
The government has been determined to ensure the Nigeria Gas Master Plan is fully executed because of its impact. That is why we are talking about the South pipeline to Ajaokuta, which is the last interlink. So I give them credit for that.
There are quite a several programs the NNPC has initiated. The Train 7 NLNG is ongoing as we speak. A lot has happened. That is why I keep saying that gas is the mainstay of our transition. If we get gas right, it would be easier for us to transition into renewables.
The Nigerian government has done a lot. But as a developing country, you know we are struggling with so many things for now. It is about focusing on what matters the most. The government has done a lot, but there is room for more. It needs to make it possible that there is an enabling environment for investors who are interested in renewables.
If we do not deliberately do that, nobody, and I repeat, nobody will invest. Because you don’t invest to lose money; investment is business and it is not the government that should do that. In terms of investing, the government only encourages the private sector. Even the government that built power plants 20-30 years ago later realize that that is not the right way to go.
They have sold them because the government is not the best suitable to run businesses. It can only encourage them. So renewable needs to be encouraged. I may not be able to give you specifics because I don’t have one now. The reason is that there are many factors out there you have to consider. But what is important is that there is a huge amount of gap between the energy we need and the energy we have today.
It is massive and the way to bridge it is to quickly scale up energy availability using gas and slowly transition to renewables, over time. If we did not take deliberate action on it, then we will be caught in the middle where we have oil and gas but will not be able to produce it because there is no finance to do that. I can’t speak the mind of the international community, but when you talk about energy, it is usually about the national interest of any country. It is also about the interests of businesses: where do you put money and make money.
Today, because of what is going on in the world, there is a renewed interest again in African gas. I’m not going to go into that but you can see that it’s about national interest. You can see that where national interest is threatened, countries move. It is left for us to market ourselves to the world and let them understand the need to have their energy security tied to our energy security – that is key. It is a win-win. If it is not a win-win, it is not going to work.
But I believe we have a way of making it a win-win. Besides the energy security, you can see what is going on because of the poor economy that we have. Some of our folks are trying to cross the Mediterranean Sea. I can tell you the reason is primarily because of the poor economy of Africa.
Most Africans will prefer to live in Africa but the economy is an issue that drives people away from their homes. They want to live a better life. If we take this message to the West and anchor it very well, they will see the Nexus in helping us develop to keep also the West the way they want it.