REFINED TASTES

Nigeria 2015 | ENERGY | INTERVIEW

TBY talks to Felix Valentine, Managing Director & CEO of Energia Limited, on indigenous participation in the oil and gas industry, and the opportunities available for smaller operators.

Felix Valentine
BIOGRAPHY
Felix Valentine graduated with a degree in Petroleum Engineering from the University of Port Harcourt, holds an MBA in International Business Management, and a Master’s Degree in Economics. He began his career in the oil industry as a Production Technologist with SPDC, and is currently Managing Director & CEO of Energia Limited.

How did Energia Limited become a pioneer of indigenous oil and gas companies?

Energia started as an idea shared by certain key members of the Petroleum Technology Association of Nigeria (PETAN) to utilize indigenous capacity and local content to manage an exploration and production (E&P) company. The founding companies include Oildata, Weltek, Sowsco, Ciscon, Skangix, and Ariboil. Others included Pemec, IDD, Ashbert, and ISK, which is a law firm owned by renowned security officer Chief A.K. Horsfall, who is also the Chairman of the Board of Directors of Energia. The company was awarded the Ebendo and Obodoeti marginal fields in the 2003 bidding rounds in a joint venture with Oando by the Department of Petroleum Resources (DPR), with Energia Limited as the designated Operator in a 55/45 split in favor of Energia. Operations started in 2008, leading to the first oil in December 2009 after Energia's in-house technology group, in collaboration with other local contractors, revamped an already abandoned Total well. The company has since carried out further field development with the back-to-back drilling and completion of four wells between 2012 and 1Q2014 to bring field production capacity to around 10,000 bbl/d, with a technical allowable 8,000 bbl/d by the DPR. We are presently embarking on an alternate crude evacuation route through a new 53-km, 12-inch pipeline to the Forcados terminal with a member of our cluster company in Delta State. This will free all locked-in crude potential due to restrictions through Agip's Brass Oil Export Terminal. As a company, we are locking in about 5,000-6,000 bbl/d, while the entire cluster of Midwestern, Pillar Oil, and Platform Petroleum with Energia is locking in around 15,000 bbl/d. Besides the export and production restrictions, we also suffer high crude theft ca. 20%-25% of daily injection, which over the past two years has amounted to a $200 million loss for the four companies in the cluster. It is as a result of these restrictions and theft, plus the anticipation of a possible global crude glut due to growth in shale oil, that propelled our move for a mini 10,000 bbl/d refinery within our area of operation.

What is Energia's core objective?

Our objective is to be the first indigenous company to build a standard crude oil refinery plant. Studies are already underway in Houston with one of the top refining companies. Energia is a success story that was hardly known before. Now, we are becoming a household name in the indigenous E&P industry in Nigeria, and are creating a brand of integrity. We want to set up a local company with an international outlook in terms of transparency in our processes. In terms of success, I think we are one of the most successful because we were able to drill four wells back-to-back, which is unique for an indigenous company. We have lined up a work program for 2015 and 2016. Our target by 2016-2017 is to post 20,000 bbl/d of production. Our only current limitation is the pipeline export restriction. We can only inject 3,000 bbl/d, and, frankly, this is the major challenge we have since we invested $150 million in drilling and completing the wells and tying the flow lines to the flow station. Therefore, we created a joint venture with another independent company, Midwestern, to construct an alternate pipeline to another export terminal. This pipe will soon have the first oil put through it, and it will give Energia, Midwestern, and a cluster of other companies the ability to pump 66,000 bbl/d; of this 21,000 bbl/d will pass through Agip's Brass Terminal, and 45,000 bbl/d through this line to Shell's Forcados Terminal. Between Energia and Midwestern alone we are locking in somewhere between 15,000 bbl/d and 17,000 bbl/d because of the pipeline restriction.

What is your assessment of the Nigerian Local Content Act?

It is fantastic for the oil and gas industry because Nigeria is growing. There are about 175 million Nigerians, with a projection to reach about 450 million by 2050. With such a population explosion, unemployment will be a major issue, which must be a priority for any government. Oil and gas are non-renewable, and Nigeria must take full advantage of this industry to diversify the economy. Nigerian content is for those who are present now and those who are yet to be born. If Nigeria has 250 million or 400 million people, we will need to employ all of them, otherwise we will face difficulty. In the next 20 or 30 years, we need to move the economy out of this developing state and into a developed one. We need to engage the entire population. Considerable success has been achieved by the board in this regard. The good news, also, is that other sectors and ministries in the country are adopting the Oil and Gas Nigerian Content Act model. Such growth in Nigerian content in other sectors will bring rapid industrialization of the economy. Nigeria is the country that can do this for Africa. Currently, we have an infrastructure deficit, but there is pressure from around globe for Nigeria to reverse this, as Africa and West Africa look at Nigeria for leadership in this direction.

You want to industrialize, yet not at the expense of local communities, as Energia values giving back to those communities impacted by local oil&gas operations. Could you tell us more about that?

Energia's model is unique and second to none in the industry. I found that if you share resources, you win over the people. We dedicate about 4% of our gross production and provide 3% to sustainable projects, and are well liked by all parties. The communities have come appreciate our sincerity. When they have a problem, we share it. Our model has moved away from the benefactor-beneficiary scenario to the stakeholder and partnership model. We have created a trust fund with our proceeds to superintend the development of these communities. We have also set up a company/community parliament system that engages a wider group of communities in an interactive setting to discuss any and all issues concerning the environment. We also encourage young people to incorporate limited liability companies that can be mentored into growth, and this we have been doing since 2009.

What is your vision for the future of the Nigerian oil and gas sector?

The Nigerian oil and gas industry will drive the economy in terms of the opportunities we can create. The Petroleum Industry Bill (PIB), when passed, will provide transparency and accountability, and, frankly, we do not have a choice if we are to compete globally. As part of this vision, the government is privatizing the power sector, and we are also opening up the midstream and downstream operations; rather than selling crude natural resources, which are hallmarks of developing economies, we will refine and process our natural resources and export finished products. I see Nigeria in 20 years, if we hold out, and I know we will, becoming relevant in every global engagement. That is my vision for Nigeria. In every area of trade, technology, industry, and education, the Nigerian opinion will be sought after.