How are the depressed oil prices playing out in your sector?
International oil companies have called on us to push down our rates between 10-30%. We have had to made cutbacks on projects and a lot of projects have been downsized or canceled. On our part, we are trying to strategize and have a new way to cope with some of these new challenges impacting our business. However, the Local Content Act has done a lot for us in pushing our business forward. It has given us leverage with companies who now have to consider us as an option. In the past, most companies were dealing with foreign firms, so it was difficult for Nigerian companies that owned their own vessels. Since the act was passed, we have been considered for local company bids ahead of the multinational companies. The downward pressure of declining oil prices makes having a optimum technical capabilities all the more necessary, but it is difficult for us to make proposals for our strategic direction moving forward new at the moment until some of the new governmental elements are in place. Rather than renting a full drilling rig that could take on some of the completion of new projects, we plan to adopt new technology first for smaller rigs to reduce costs and expand from there.
The board of NNPC has been revamped—where does that leave the industry in relation to the mix of local and international talent?
The changes in the board is a positive development because the best way to run a business is to be transparent. This government is moving in the right direction, they have been proactive and the new GMD is focused on change. Coming from Exxon Mobil, Kachikwu brought a lot of experience to the table; he understands the industry from the IOC perspective. He is coming on board with great quality, so the shakeup is a move in the right direction. One of the challenges has always been human capital; young graduates often change jobs after receiving intensive company training. In addition transparency matters, this instability in human capital presents a serious challenge for the industry. I am an advocate for indigenous companies coming together to synergize. Five or six companies come together to execute a common project by sharing personnel, equipment, and resources, thereby reducing the overall burden. It is important that as we create a drive for local content and create synergy between Nigerian companies and foreign players. In this way, we will be better able to deliver world-class projects. Our focus is to bring companies together that have good quality records, a good image, well-developed human capital, and good technical competence that can grow more in capacity together.
What is your outlook for 2016?
We anticipate a good year overall, but it is going to be slow in the first months of 2016. We are working for NPDC oil intervention and are still looking at Chevron for some of the assets on the swamp, because the swamp is going to reopen again. We would also like to get involved with the Shell Bonga project once that site comes on board. Most companies have slashed their budgets, but they will pick up gradually. Companies who know what they are doing will persevere—it is a matter of having a successful business model and organizational structure. There was a time when oil sold for $10 a barrel in this country and we still got through it, so it is a question of the country being aligned with global actions and ensuring that the economic policy is suited for the conditions we face. Nigerian oil companies' revenues will grow, but the country should begin to look at diversifying away from oil and gas. There is a lot of money in agriculture and other sectors. By contrast, Norway has not touched one dollar of the revenues they have earned from oil and gas over the last 40 years; that money is kept in an account. We need to start doing serious diversification right now so that we can have set aside resources for future investments, when the economy will rely on other sectors in addition to oil and gas.