The year is gone. If you take a look from January till now, do you think the expectations of the industry have been met?

The Nigeria oil servicing industry is maturing. It’s an indication that local industry initiative has come to stay. People have recognized that this is not a passive trying but positive things are happening.

More and more independent operators are coming to recognize that to thoroughly grow capacity you can no longer do it from palm flash point of view. We have seen companies like Shell, Agip, NCDMB collaborating with PETAN on initiatives that seem to create “win-win’’ scenario.

This is a long term view. What happened this year and last year is setting pace for sustained growth for oil servicing companies in Nigeria over the next decade, because infrastructure is being built, capacity is been run, irrespective of availability of contract and staff, but with a realisation that as far as oil industry in Nigeria goes, there is potential for growth. Therefore we can invest.

To what extent has the Federal Government supported local capacity In Nigeria ?

I think that more than anything, we need to recognize and applaud this government for taking the bold step to pass the Local Content Act. I think this is laudable. The reality is that the passage of the Act was a good initiative and that is the impetus for local Nigerian companies to begin to ramp up capacity. That is the bottom line, to a large extent that has created a spring board for growth in the whole sense.

There are certain things lined up which could position Nigeria as a strong country over the next 20 to 30 years. The first is local content and gas master plan which created a basis for real gas market, privatising power will grow Nigeria economy. PIB will also create long term investment.

The Naira has depreciated. Do you think it has any implication on Nigeria ’s crude export, as well as import of petrol?

One has to place this against the geo-political nature of our industry and by extension, the naira. You see, the price of oil and the value of dollars at the international market is inversely proportional. In other words, when the oil price drops, the dollar gets stronger. For obvious reason, the dollar is the currency of choice in oil transaction.

If the price is high, there are more dollars. If there are more dollars, then there are more dollars to spend, and if you spend more dollars, they will weaken in value.

This is supply and demand scenario. Now, you bring it closer home, when the dollar gets stronger, because of the lower rate price, there is automatic pressure on the naira to get weaker because it gives proportional interest in that context so, to a large extent, a stronger implication weaken naira except it can be sustained artificially. However, I think that due to local content in the past oil pricing there is less impact on local services. Today, you have local capacity created by local content. There is local capacity to generate employment. Therefore that will help to sustain or downplay the weakening of the naira.

Are you not worried that this may affect investment in the sector which may lead to loss of contract by indigenous service companies?

It is interesting that the current crash price is not creating the panic within the industry that previous crashes have generated, which is a good sign. It means that the industry is matured. However, you have to understand that Nigeria ’s oil today is not as cheap as it was 15 years ago. The reality today is that cost of production of Nigeria ’s oil is within 20 to 30 dollars per barrel or more.

The circle of ups and downs is good. It allows efficiency to be built in. It allows companies to re-strategize on how to deliver services quicker, better and faster.

I think to a large extent the opportunity that Nigerian companies had should be increased because all companies now want to get more values and they are not ready to open up their cheque books and sign without asking for values rendered.

We reckon that Nigerian content and Nigerian companies will actually get busier with the support of regulators and policy makers.

Some stakeholders have said that the survival of the oil industry depends on PETAN, what role do you think you have played to justify such confidence?.

PETAN continues to provide leadership. We advocate on behalf of the industry, not just Nigerian companies. PETAN advocates on what is good and best for the industry, both from operators, Nigerians and international companies’ point of view.

That is the reality of it because, we are in the same boat. We want to continue to provide services that are world class for operators that want to get world class values for the dollar they pay service for. We want to encourage and continue to encourage investment. In that regard, PETAN’s leadership role in the industry is participatory, collaborative and incisive. We recognized that for the industry to keep growing, we have to maximize local availability of services.

In this period where return on investments is declining, do you think investment in Free Trade Zones is the best for PETAN companies and how do you think it can be spread across the regional zones in the country?

Historically, China economy grows at least 100 per cent on the creation of special economic zones. At the time it encourages trade across their borders.

To a large extent, FTZ in Nigeria enables investments. It is safe heaven for investments. Across Nigeria , you find out that FTZs are clustered in Lagos , North and no one single FTZ in the South-Eastern part of the country, out of 30 FTZs in Nigeria .

It’s ironical because most people from South-East are industrialists and one expects that such initiative will strive in the area and I do want to commend the president for approving first FTZ in Enugu 2013. It is very commendable.

How come we have not seen any kind of activity since the FTZs were conceived?

I believe that the promoters of the projects on FTZs know of the long term viability. These things are subject to lots of scrutiny. l must commend the current minister for Trade & Investments, because he brought some level of professionalism to investment that was missing in the past, which may account for why many FTZs in the past had not succeeded.

Investors are ready to invest to establish long term viability. It is our expectation that before the end of the year, the authority in charge will give approval for the zones to take off. That will create another centre of industrial activities potentially that can support the oil and gas industry.

Are investors not worried that the presidential approval is oral. What is the fate of lock down investments considering that funds continue to accumulate, partners are beginning to run out of patience. Foreign investment partners are also losing confidence, is delay not dangerous in this case?

In terms of time frame, it can be frustrating. However one thing we have recognized is that, to get to this level and point of approval, there is need to protect the interest of investors and partners. Yes we have few who had lost interest in the past, yet we have few who had built confidence in the zone, simply because they have committed their fund. Some of them have also tested the model available prior to getting to the project.

We have had interest in the projects as far as Australia , China , India , Czech Republic , USA manufacturing solar panels. We have companies that want to set up fertilizer plants. We have companies that want to manufacture various electrical and generating equipment within the zones.

All of them are making their plans on the available opportunities of the region, not just Nigeria but surrounding regions, West Africa , and East Central Africa in terms of ability to export their products into these areas.

In terms of energy factors that will drive the economy in the region, do you think that FTZs can accommodate viable investment in power generation and oil and gas?

Nigeria today has about 170 million people. Brazil is about 109 million. They produce 2 million barrels of oil per day. Nigeria does 2.4 million on a good day but the difference is that Nigeria produces 5 per cent of the power that Brazil generates. Where Brazil is generating 1000 Giga watts, Nigeria is doing 5 Giga watts. Now, what that means is that with the amount of power today if all the gas that is produced in Nigeria is put to produce power it will only produce 32 giga watts.

The implication is that even if you have 10 Orient energy companies, they will not go near touching the potential in capital market. Can you imagine if we are producing 50 giga watts today, it will transform our manufacturing sector.

Today, manufacturing companies start from the scratch. They have to get their power on ground zero, while FTZ provides infrastructure so that you will only come with briefcase to start manufacturing.