KEEP DIGGING

Nigeria 2016 | ENERGY | INTERVIEW

TBY talks to Felix Valentine, Managing Director & CEO of Energia, on joint ventures, recent developments, and production levels.

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

You signed a 12” pipeline joint-venture agreement that you hoped would increase the amount of exported crude and curb theft. How is that progressing?

We have since completed the project with our partner, and it has been in operation since November 2014. This has helped increase total volume injection, but it is not a solution to vandalism, being exposed to the same environment. There have already been sabotage attempts on the new line. We are hoping the new government can address that soon. If we share our crude through the refinery, we will reduce our losses.

In the broader spectrum of indigenous companies operating in Nigeria, what developments have there been over the past year, and what has been the impact of your efforts?

Since the marginal field auctions took place in 2003, room has opened up for Nigerians to participate. Previously, we had all been staff or managers at the IOCs, apart from one or two independents. It was the domain of Shell, Chevron, and the like, while today many more Nigerians have become involved. Then, the divestments came in on top of the marginal fields, and together, those factors have increased the production volume of the Nigerian independents. Shell has almost given up its onshore assets and I believe it wants to focus on gas and the larger deep off-shore prospective asset. For Energia, we have been able to create a strong presence. We are emotionally, mentally, and technically ready to play on the next level.

How has the goal of 15,000 bpd set last year progressed, and how has the decline in oil prices affected your targets and the price of assets?

The game has changed considerably, and we have ceased drilling as the margin between the costs of operation and the crude price became too wide. The industry is not yet properly indexed, so when the price of crude drops, it is not immediately reflected in the service cost. Contracts change over time. We chose to meet with our partners and to maintain production at 9,000 barrels. Hopefully, drilling will start later in 2015. Someone has to close the spigots at OPEC because members are already suffering. Pressure on Saudi Arabia is growing. Energia has stopped drilling, although it is more accurate to say that we have stopped exploring, because we drill to maintain production. We now have to drill better, cheaper, faster, and more efficiently so that our costs reflect prevailing low prices. In an environment of low prices one has to focus on efficiency. The industry doesn't slow down when prices are low. At $50 per barrel, we still drill. Energia is on the progressive side, and we cannot wait endlessly for crude prices to reach $100 per barrel before we resume drilling; we shall pick up the rig once we see a fairly stable price, even at $50 per barrel.

What are your expectations for the energy sector next year?

In Nigeria, we will be busy. By this time next year, we will be open to a lot of divestment. The marginal field round, which was suspended, will be back on the table. We will be aggressively participating to be part of the block put on sale to Chevron and Shell because we are ready to move to the next level. We will be busy with the foundation work of our refinery, drilling and increasing production with our current assets. There will be a lot of restructuring in the country. The election has given us a good rating internationally, and now we are a democratic society. Nigeria is a credible country. Energia is ready to take advantage of the opportunities set to materialize next year.