Has your clientele changed as indigenous companies like yours increased their contribution to the industry?
Increased participation of indigenous companies in the oil and gas sector is a government initiative through the local content philosophy (Nigerian Content Development and Monitoring Board); however, progress has been slow. Makon's clientele has remained essentially the same over the past years. SPDC replaced some of the contracts, one of which was with Eroton Exploration and Production Company Limited. Another contract was with Nigerian Petroleum Development Company, with ND Western as Joint Venture partner. The composition of our clients is still skewed toward IOCs and local indigenous exploration and production players. We bid for projects with both local and international companies. For example, we are working hard to be a part of Nigeria LNG's Train 7 project, and if successful, it would be a major deal for us.
How was last year for Makon Group?
2018 was a better year for Makon. I understand by my training that debt is cheaper than equity, therefore we utilize debts as a tool for business growth. We are committed to keep servicing our debt. 2017 was a rough year as we could not conclude many of our projects due to cash call challenge, but in 2018 we made remarkable progress with projects such as Egbema NAG/AG Gas plants, Ughelli East, Ughelli West, and Utorogu Gas Projects (3Us), which aims to remove flares from different flow stations. We also made progress on the NLNG Central Control Room upgrade project, which is now in final stages. Previously concluded projects, such as Utorogu NAG2 for ND Western/NPDC JV, which delivers 150 million standard cubic feet per day (MMscfd), are kept up and running.
Can you elaborate on your projects?
Our major projects involve the installation of gas handling and processing plants. Nigeria flares substantial amount of gas, which is bad for the economy. It is also hazardous to the environment, which is why there was a decision to reverse this trend. We have contributed significantly in this regard. Among projects that have been completed are Utorogu NAG2, a 150-MMscfd natural gas handling and processing facility; Bonny AG, a 5-MMscfd gas project; and Adibawa AG, a 5-MMscfd gas project. Other projects such as Alakiri Non-Associated Gas, Egbema Associated Gas and Non-Associated Gas processing plants, and Ughelli East, Ughelli West, and Utorogu Plants are in process at different stages of completion.
Going forward, will debt continue to fund further growth?
Debt is cheaper than equity, so we will still depend on debt for our operations. As a private company, we endeavor to be prudent to keep our cost at reasonable levels. In terms of raising capital by getting listed on the stage exchange, I cannot disclose if we are considering that route at the moment.
How do you assess investment sentiment and activity in Nigeria's oil and gas sector?
The government is determined to reduce the burden on its cash calls; this was made clear in the budget assumptions, and we expect it will result in using public-private partnerships to self-fund projects. We welcome this move because it would afford creativity in our business approach. There are numerous upcoming gas projects, which is our area of focus. Notably, Nigeria still has an estimated 165 trillion standard cubic feet of gas, including 75.4 trillion standard cubic feet of non-associated gas. We certainly have ample opportunity for our operations within the country.
What are your expectations for 2019?
Our slogan is “consolidate and expand," and we look to complete three major projects in 2019, with the possibility of signing additional contracts. We want to ensure better brand visibility. We currently have a strong brand that we intend to leverage for better growth. We have a strong workforce with tremendous competence in-house. We will also seek strategic partnerships in areas where it is considered necessary.