It is usually difficult to get a Chief Executive officer of a renowned oil and gas company to freely tell his own story in view of the peculiar nature of the business and the prevailing dearth of information and competitive tendencies in the sector. The Chairman/CEO of the International Energy Services Limited (IESL), Dr Diran Fawibe damned the consequences to kindly grant an elaborate and revealing interview to Orient Energy Review. In the interview, he spelt out the scope and depth of the activities of IESL and more.
According to Dr Fawibe, “IESL, as we are popularly known, was established about 28 years ago. We started in 1990 but we rolled out effectively in 1991 and we have been engaged in providing consultancy and oilfield services in the industry. “We started as a training company and then moved out to other activities like environmental and analytical laboratory services, waste management and so on. For example, we have a big analytical laboratory in Port Harcourt, where we provide various types of analysis like full hydrocarbon analysis, emission control, effluent monitoring, corrosion management, and water analysis. We also have a microbiology lab and a geotechnical lab all within this laboratory, and we work for virtually all the major oil companies, Chevron, Shell, Total, ExonMobil, and so on.”
He said, “We moved on to do manpower supply to the industry by hiring both expatriates and locals for the various oil companies. We also do Project Management, Construction Supervision for various projects, Pipelines and Facility upgrade, but what remains the flagship service operation we provide is the engineering design of oil and gas facilities and pipelines, including FPSO designs. Continuing he noted that, “As a matter of fact, for over 10 years now, we have been engaged in engineering designs. We were the only Nigerian company that did four modules to the Deepwater Usan FPSO, with 180,000 man-hours. We worked on Ofon 1 & 2, as well as Chevron’s DSO Offshore Project,involving the design of two Offshore Platforms.
“We are part of the Egina success story, being one of the consortiums of three companies that undertook the Engineering Design of the FPSO. Our contribution was about 30% of the job and that happened so successfully. We were also involved in the subsea production system design with Cameron as a subcontractor for Erha North Phase 2, with a remarkable performance which stood us out as a good stead for partnership with other companies for similar subsea system designs.
Disclosing that despite all its achievements, IESL also ventured into the area of Power and Renewable Energy, with the capability to do Solar designs and installation, and even combine it with Wind Energy. “We did this hybrid for the Energy Commission of Nigeria (ECN) so many years ago and it is still working. We also did a rural electrification solar project in Imo State. We did various solar design and installation of facilities including and navigational aids, homes, schools, boreholes and so on.
“In summary, IESL presently operates with five semi-autonomous business divisions; Engineering Design and Construction; Oilfield Supply and Services (dealing with supply management, installation and maintenance of equipment and facilities); Environmental and Analytical Laboratory; Gas, Power & Renewables, and Manpower Resources and Training.
“As a result of our phenomenal success, we eventually came to the point where it became necessary to export our expertise to other countries. We are now registered in Ghana, Equatorial Guinea, Angola and Mozambique, Liberia and Gabon. Our real aim is to become a Pan-African company.”
The following represents the question and answer portion of the interview.
How did IESL rise to the limelight, what will you say your success factor comes down to?
I will say it is because we run the company as a business and that we engage the services of professionals. As a business, we try as much as possible to apply good business practices which will satisfy our major clients, noting that these clients are mostly International Oil Companies (IOCs) and their business is a serious business which gives no room for trial and error. This orientation helps us in IESL to provide services that satisfy our clients, which in turn has led to repeat businesses. I will put this down as the first factor of our success. The next factor is the quality of our services; we strive to keep it top notch. Emphasis on quality is one of the core values we’ve imbibed in IESL; it’s like a mantra for us that we render quality services. To show how serious we are about quality, we have three International standard certifications which govern most of our operations. We have an ISO in Quality Management System, the second one is an ISO in Environmental Management System and an ISO in Safety Management System, formally identified as OHSAS. We train our staff regularly to maintain this culture of rendering exceptional quality services to our clients’ satisfaction while meeting all the standard requirements of the business. Also, our Management works as a team to maintain integrity as our most important core value; the combination of these values and our strict adherence to best business practices is what I consider the major driving force behind our activities.
We both know that this present Administration has a vigorous drive towards actualising the potentials of our Local Content policies, can you tell us how these policies have impacted IESL?
Having been around before the advent of the Nigerian Oil and Gas Industry Content Development Act (NOGICD Act) in 2010, we had to grapple with the obstacles and the challenges which constrained the activities and the progress of the local oilfield service companies. We decided in IESL to contribute what we could to shape the process of formulating the policies that will govern local participation in the industry. So, we started a popular Energy Forum in the form of an annual conference that attracted top level executives in the energy, and oil and gas industry and ministerial presence as well. It was very successful, while we were engaged in running workshops and training programs as well. There was a year we had four Ministers in one seating! This conference lasted for 10 years and it provided the platform used to articulate some of the major issues in the industry, the imperatives of local content and the NOGICD Act as we know it today was part of this initiative.
The Act has provided the basis for us to navigate service offering in the industry differently from the way it used to be before, when the IOCs were playing all kinds of games to exclude Nigerian companies from participating. Before 2010, NNPC was applying policy guidelines meant to allow Nigerian Companies participate in providing services in the industry, whereby specified scopes were assigned to Nigerian companies in some of the projects undertaken by the IOCs, but of course they had their way of making excuses for the reasons why the Nigerian companies can’t participate. In order to resolve this impasse, the government did a fantastic job by setting up a consultancy to audit the capabilities of all the Nigerian Companies in the industry and classified them on the basis of their capabilities or specialisations. The audit thereby provided the basis used for setting the targets given to the IOCs for Local participation.
I can say that we all have a win-win situation right now with the drive the NCDMB and government are making on local content engagements. If they stopped at creating a very good Local Content Policy and then fail to enforce it, the Nigerian Companies and the economy at large will be worse off. If the IOCs are not working with local service providers who have the right capability and specialisation, their cost of doing business and reputation will be affected negatively in the long run. The Act has emboldened IESL and many other indigenous companies to bring in more investments which we couldn’t have considered doing so if we have no guarantee that we will be successful in our bids for projects. The only thing I can say that has a negative impact on us is the drop in the oil prices and it’s consequently slowing down activities in the industry, apart from that IESL has largely benefited from the enabling environment the Act has availed us.
So what was the day-to-day running of business like for IESL in those pre-NOGICD Act days?
IESL was privileged enough to have a lot of jobs even before the Act was enacted in 2010. Around 2007 – 2008 we were involved in the engineering and designing of the Ofon platform. We did it for Total and we also got the opportunity to provide our services in their Usan FPSO project. It was based on the good intention Total and NNPC had towards IESL through Hyundai Heavy Industries (HHI), the major contractor of Total for USAN FPSO fabrication, because the target that is currently a law was not stipulated then. We were able to perform 180,000 man-hours partly because it was our capacity then and partly because Total had no legal obligation to go beyond their goodwill when it was just policy guidelines as against the current situation that they can be sanctioned for evading or undermining the targets stipulated in the Act.
The IOCs who gave us major projects then could have easily side-tracked us in those days. It was quite rampant then that jobs were given to service companies who share the same country of origin with the IOCs for obvious reasons. So, what we got then was a real life saver for us. The record shows compliance to Local Content to be as low as 5% then as against about 30% presently. Contracts awarded in tens of billion dollars were not spent locally up to half a billion, so for IESL to be part of that 5%, it is not something we take for granted.
You are here in Cape Town for Africa Oil Week 2018 as an industry expert, what’s your advice to other African countries regarding the implementation of their own Local Content policies, what can they learn from your Nigerian experience and how do you think they should go about implementing their policies in such a way that their national companies can thrive?
I will suggest that other countries use what they can learn from Nigeria, although without saying this, many of them out of their own volition are already sending delegations to examine or understand what is happening in Nigeria. I have had the opportunity to make presentations in three African countries where I highlighted how Nigerian Content policymakers have been able to develop our Local Content policy and monitor its implementation in such a way that companies like IESL can now compete well with our foreign counterparts. Subsequently, doors were opened to us based on that unique African expertise, we bring to the table with our quality services and because we have a better understanding of Africa- related challenges in doing business than those outside the region. We used that opportunity to train nationals and build their capacity.
Having said that, I need to sound a word of caution here about Local Content policy implementation. It depends largely on the level of current activities in each Oil and Gas industry per country. Those who are just exploring oil and gas will have a certain level of Local Content implementation (like Namibia) different from those that are actually producing (like Ghana). The success story in Nigeria was largely dictated by the maturity of the Oil and Gas Industry in Nigeria; so for many countries in the region with a growing Oil and Gas industry, it is necessary that they have their own development timeline unique to their needs and stage of development.
Do you have concerns about what technology and digital disruptions can do to the progress IESL has made so far? Is IESL prepared enough for the new ways of service delivery in this digital age?
IESL is adapting to new technologies; we are doing some things only foreign companies were able to do before. In the past, GE, Halliburton and Schlumberger were the big names when it comes to developing technologies, they have strong Research and Development (R&D) programmes and each year they showcase their recent innovations in various Oil shows, but since we are operating in the same space through our Local Content policy, we have taken a cue from them to gain from their developed technologies.
We seek to improve on their technology by pushing the frontier of their innovations further; we look for ways to make their technology more applicable to our own environment.
What I would like to see is a situation where NNPC makes strong provision for R&D on behalf of Nigerian oil and gas industry, and the indigenous companies key in on the programmes in a collaborative way with a synergy. We can’t expect Total, ExonMobil, Shell or Chevron to champion this for us. On the other hand, indigenous companies can collaborate to set up their own R&D, knowing fully well that we can’t retain our vantage position if the International Oil and Gas community has developed their technological approach of doing business to the point where we are no longer a cheaper option for their operations in the face of declining oil prices.