Mr. Victor Okoronkwo, GMD, Aiteo Eastern E&P
-By Felix Douglas
The Aiteo Group has diverse interests across the energy value chain in Nigeria, ranging from oil trading, exploration and production, electricity generation infrastructure including mining and agriculture.
In 2014 Aiteo Energy Resources set up an SPV Aiteo Eastern Exploration and Production (E&P) Company to participate in the upstream onshore asset divestment by Shell, Total and Agip in some of their joint venture assets. Aiteo Eastern E&P emerged the winner of the competitive bid for 45% stake in OML 29 and the Nembe Creek Trunk Line (NCTL). OML 29 is entirely situated within Bayelsa state.
Aiteo is the operator of the NNPC Aiteo JV with assets comprising OML 29 and Nembe Creek Trunk Line. The Nembe Creek Trunk Line is a 117km pipeline, stretching from Bayelsa state to Bonny in Rivers state, with 600,000 barrels per day design capacity.
Speaking at the 9th Practical Nigerian Content (PNC) held in Bayelsa State, the Group Managing Director (GMD) of Aiteo E&P, Victor Okoronkwo said by all perspectives, the company represents a testimony of what local content underpinned of which only dogged entrepreneurship can achieve. “In Aiteo, we are nearly 98% locally staffed and our contractors are largely local. Our procurement of goods and services are also mainly through local suppliers.”
Okoronkwo expressed concern that one of the biggest challenges the indigenous company faces in its operations is the security of its pipelines and oil facilities. “Our pipelines and flowlines are constantly vandalized by unscrupulous elements tagged ‘crude oil thieves’ attempting to cause economic sabotage to our company and the people of this great country. Despite our efforts in raising NCTL uptime from 60% to over 80% since acquisition, we have recorded more shutdown days in operations due to third party infractions for over 2 months this year compared to previous years” the Aiteo GMD bemoaned.
According to the Aiteo GMD, this has resulted in loss of revenue and deferments estimated at about 4 million barrels in 2019. Also worrisome is the amount of crude loss recorded even when the pipeline is operational, usually in the range of 25 to 35%. More worrying is that even when the perpetrators of these acts are caught and handed over to security agencies, no convictions has been witnessed. “Remember, Aiteo operates the NCTL which also serves 4 other oil companies (Eroton, Newcross, Belema Oil and Shell) injecting into the pipeline, hence, when there are infractions on the line, these companies are also forced to shut-down; resulting in economic losses for these companies also and the Federal Government by and large.”
Okoronkwo added that in spite all these challenges, the company has kept its commitment to the Nigerian Content Development Monitoring Board (NCDMB) paying up to N1.52 billion in NCDMB fees and N1.5 billion as NDDC levies. In addition, Aiteo has spent over N3.6 billion in community support programs and projects; offered jobs to thousands of Nigerians and intentionally led inclusive participation of indigenous contractors in its business operations, from EPCM provisions, provision of marine equipment, civil works and manpower provisions.
The Aiteo GMD said, the company joins other stakeholders to “celebrate the 10th year anniversary of NCDMB, we cannot but look at the achievements the board has recorded through our own levies. I am sure you will see similar feats, if not more, through your own individual levies. Some of the achievements include but not limited to: Nigerian Content Intervention Fund with BOI which is now fully deployed.”
He emphasized on growth of Nigerian Content performance from 5% to 28% and laudable plans to increase Nigerian Content participation to a target 70% by 2027 which is a welcome idea. Equity participation by the Board in major industry projects undertaken by Nigerian companies. Indigenous participation helps de-risk these projects and unlock debt financing.
Okoronkwo opined that it is imperative to consider the current workforce dimensions in the oil and gas upstream space and its probable impact on the future of the industry. He said the upstream sector has until recently, been largely dominated by International Oil Companies (IOCs). Driven by the quest for excellence in a highly technical business, the IOCs have engaged in various strategies to churn out technically savvy indigenous workforce, especially in engineering skills.
Many of these professionals have in recent times spearheaded the successful operationalization of acquired oil fields from IOCs by Nigerians. However, it is worth mentioning that many of these indigenous professionals are currently rather matured, hence exposing a crucial succession planning gap which, if addressed on time and with the right approach, could be core to the survival of the oil and gas industry in the future. Up until recently, technological evolution in the upstream environment has been progressively linear leading to matured business landscape.
Notwithstanding, in recent times, the once stable oil and gas industry has been dealing with massive disruption on multiple fronts. Increasing oil price volatility is adding complexity to a fast-changing energy sector where digital technologies and the drive for greener energy and demand are putting shareholder returns at risk, while creating major re-evaluation of future commodity prices and energy value chains. Digital is reinventing every aspect of the energy value chain, with new digital players and platforms disrupting the competitive landscape.
The Aiteo GMD believed that to stay relevant and retain their license to operate, oil companies must reinvent their purpose and compete more effectively in the emerging energy economy. Companies must learn to focus on the essence of their business, re-think their operating models, embrace new technologies and adopt new workforce strategies as they strive to become more agile and adaptable, connected and collaborative in the energy revolution. Embracing next generation digital technologies, especially Artificial Intelligence (AI), which, according to an Accenture 2019 Report indicates that 42% of upstream executives expect AI to have the greatest short-term impact on their businesses.
The Aiteo helmsman advised indigenous oil companies to start building workforce of the future, seeking to attract and equip a modern workforce as well as enhance labor proficiency and optimize productivity, using data and digital capabilities.
In his words, “With the oil and gas industry disruption, wait and see isn’t an option. It is time to start to reinvent for a digitalized and demand-driven future, now. I am convinced that we will come up with holistic resolutions during this workshop that will help position the industry on the right trajectory for long-term sustained and inclusive growth in the future disruptive landscape.”