The upstream petroleum industry is witnessing transition from IOCs to independents. And issues of operating capacity are throwing up disputes. How do you think Nigeria should manage the challenges associated with the emerging crew change?
At this stage, I think we have people who are capable of taking up the mantle; people who have been in the oil industry for many years. In these years, many suitably qualified Nigerians have been trained, skilled and exposed to global play. They have picked up a lot of experiences and expertise that will enable them run the show if given the opportunity.
Yes, it is true that some of the big companies like Shell, Schlumberger, Baker Hughes and Halliburton have from time to time brought Nigerians to run their operations in the country. But then, some of these guys come with the background of opportunity. But there are people on the ground who do not have that background and are very suitable to do the job.
If you bring a Shell staff for instance to run the show, the person will come with the background and mentality of corporate Shell. That is why, often, you see that some people would rather have someone from a service company to their show than someone from the IOCs. The training they get from service companies and the world they have travelled make them deal with issues like businessmen. But under the clout of the IOCs, the system propels itself and you do not really get challenged. You are only an administrator.
To me, I think Nigeria is still good where we are by now. The IOCs can still go ahead and make their money, but they can still do that by getting Nigerians to run the show. I think Nigerians can take up management of the entire industry, be it IOC or independent operators. They can do it. That’s the way to prepare for the inevitable crew change.
There is this longstanding problem of retraining fresh Nigerian engineers to fit into the industry? How do you think that the industry and government can help reconfigure the tertiary education curricula to enable Nigerian graduate employees hit the ground running?
Many years ago, what obtained was that before you graduate from any technical field of study, you go on serous industry placement. I mean real industry placement, not man-know-man! This was made to form part of your citation before graduation.
Often, the host company have the evaluation responsibility on you. If you are good, they will make you an offer on graduation and retain you.
So, apart from the theoretical training you got from the university, the industry placement also provides you with that tool. Training never stops. If you learn something today, it is for a task today. For tomorrow, you need to tool up!
So, for Nigerian graduates to hit the ground running, they must necessarily undergo industry placements. All these other centres that offer short term training are not too different from university education. The only difference is the hands-on training they secure from the industry. All they need is hands-on training. They go to the industry or and an agency that provides that and learn. And what the agencies do is provide the students the opportunity to participate in ongoing projects of the time. And by so doing, the students skill up and understand what is needed both in practice and in communication.
If they get to a job interview you will understand what I mean. It wouldn’t take the company time to get them up and running.
So in preparing them for direct entry into the industry, there are two ways about it. One is to send them to some of the training bodies around; either PTDF, PTI or any of them. Another way to look at it is that we retool or reequip the universities such that a university student probably who does engineering, is involved in very serious engineering projects within the university, and not just theory and theory.
When we went to the university, the engineering students were involved in serious projects; both on the university and during industrial placements. So all the theoretical studies they took in class, they see them work out in real projects. Then, in their third year, they went on industrial placements which the industry organized with the institutions. And the companies they worked with would normally write back to the universities as to the performance of the students.
Most of the present day oil workers and executives actually got their jobs straight from the universities. In those days, the likes of Schlumberger, Shell and others were going to universities to interview students. They offered them industrial placement and most of the people on industrial placement were offered jobs at the end of their studies. Some were brought in as youth corps members and exposed to industry tasks while still serving. Those who proved themselves were offered jobs. We can still make it happen again.
Every industry is aligning with new global standards on governance processes, technological innovations and environmental responsibility. It appears that the global business standards and skill requirements are leaving Nigerian educational standards behind. What gaps can we plug locally to tame the mentality of going elsewhere to upskill?
That is a strong question that tasks the industry practices in Nigeria. The industry in Nigeria and the education institutions should work hand in hand. When you hear of Aberdeen: the Gordon Brown University, Edinburgh and other institutions they have, they are the places that our people go to train; not in the industry!
What happens in those countries is that the government and the industry work in collaboration with the universities. They fund researches and programmes that innovate processes and introduce new solutions to industry operations. You do not see graduates from their universities going somewhere else to learn something about oil and gas. They have already acquired it in their first degree. It is part of the programme. The same thing could happen here!
Some universities like the University of Port Harcourt and federal University if technology, Owerri, have very good engineering programmes. But have many companies from the industries in the country given them the required collaboration? That is where these other people are different.
In the developed countries of the West, the industry and the government work together to deliver programmes, funding and sundry resources to the universities to deliver them graduates that meet modern industry practices.
That is what is lacking!
What we observe in Nigeria is that collaboration is difficult, especially among the hundreds of private trainers that cooperate in associations. Is there any role you think regulation can play in harnessing internal resources and creating efficiencies that solidify these OGTAN companies into Centres of Excellence for the industry?
Centres of excellence are something good. But if you look outside, you do not form them outside existing structures.
If you go to Warwick University in Uk, it is a world centre of excellence for manufacturing which funded by prominent industry players including Rolls Royce, British Aerospace, mention it. They all pump in money there. It is also the same thing with oil companies and institutions in the United States.
In Nigeria we do things differently. We like to create new units that are politicized and staffed with cronies, relations, old boys and so on to the extent that these institutions lose focus.
Besides, we already have centres of excellence of some sort: PTDF and the one established by Hobark. Yes. At Hobark, we in collaboration with Halliburton and Akwa Ibom State Government, set up an e-learning centre for oil and gas in Akwa Ibom State. That took us a lot of money. But it is not being used because the PTDF went and set up another one in Port Harcourt.
In Nigeria, everything is duplicated. We have to copy good things from others.
My point here is that we should stop creating all these new new things! For instance, it would be wrong to keep a centre of excellence for gas monetization inside NNPC. Keep it inside a university in the industry hub; either Rivers State, Bayelsa State or Delta State for it to be effective in delivering on national aspiration for the gas industry. All the students passing through those institutions would gain from it. If you keep it outside, what happens?
So, the most effective way to groom trainers for the petroleum industry is to use the university environment. I gave you the example of the University of Warwick. Same thing with Cambridge. The University of Cambridge has many centres of excellence. It is businesses that set them up, and it makes sense for them to set up the centres inside university environment. Those graduates passing though these centres are the masters of the future. Right from there, they create the future.
What we need is there, but it for us to do the right thing using the existing structures.
This issue plugs into the raging debate about the recommendation for replicating the successes of the Nigerian Content Development and Monitoring Board (NCDMB) across all sectors of the economy. There are differing positions about having a central regulator, having multiple local content units across all MDAs or having several desks for MDAs at NCDMB. How should we have a single local content regulator that works?
There is always the tendency of over-concentrating attention and burden on a system that has proved impactful. The NCDMB or its current Executive Secretary has proved efficient and effective in oil and gas. If we crowd him with other units from all the MDAs in the country, the agency would either be too powerful, overburdened, distracted or even corrupted.
I think for now, to avoid such, we retain what we have at NCDMB so that it will continue to set standards for other sectors. Probably the reason we have not achieved success in other agencies that have local content mandates is probably because of corruption. I am not saying that NCDMB is holy; but I maintain that corruption might be the reason we are not seeing the same level of results elsewhere.
So, the NCDMB has become a success. The other agencies and their local content models, be it cabotage or anything, could still be successes. But we have to be careful how we bring them all together.
The NCDMB for instance will soon open industrial parks and bring in some industries. Of course some people want free rent for a few years, and if care is not taken they can take it for many years. But it can also build an industry innovation centre of excellence in Bayelsa State where we have robust industry operations. That will benefit more people, especially young generation of Nigerians who would instead of going to Aberdeen would now go to Bayelsa to learn a particular set if industry technology. By the way, there are industrial parks in Aberdeen for local Scottish businesses. But where they put their money for the future is in their university where they train top skilled graduates that now traverse the global industry landscapes.
Other countries like the EU, UK and the rest also practice local content. I studied in France as a post graduate student. The French has local content law, and sometimes we confuse it with racism. The Ministry of Interior and the Foreign Ministry are the regulators because they are the ones that actually issue the permits. Then slogan was: “jobs first to the French; and after the French to the francophone countries.” And that was before they became part of the EU.
They know they control domestic unemployment by exporting their human capital to all over the world, especially to the francophone countries. So, they never ever mentioned their local content to the global community. They keep it quiet.
The NCDMB, and Simbi in particular, have tried. We do not need to wind down NCDMB, but we need to carefully tone down its voice in the international stage. Nigeria is the greatest exporter of human capital in Africa. Tomorrow, other countries may adopt stringent local content laws that would require our people to leave. We do not need to travel all the world singing local content. It should be internal strategy discussion. Foreign nations that began local content policy never mentioned it. You should normally encounter local content when applying for visa or work permit.
Going back to the main question, a big organization is not the way.
Let’s turn to the service side of the crew change. Big service multinationals like Halliburton, Schlumberger, KBR, Bakers Hughes and others are yielding ground to local upstarts like Oilserv, Oildata, Hobark and many others in PETAN. These local firms are not beneficiaries of PTDF or other capacity building agencies that have gulped down billions of dollars. How do we manage interventions to deliver on real local capacity growth?
If the government of the day acts in the interest of the country, strategies must forge inter-agency collaboration on local content policy implementation. There’s nothing wrong with the Interior Ministry and the External Affairs Ministry providing diplomatic and political backing to NCDMB. They know who to let in and who not to let in under the provisions of the NOGICD Act 2010. And these are things they should silently implement when they are aware of the provisions of the law.
Yes, Oilserv, Hobark. These guys also worked hard. Nothing was given to them on the platter of gold. Nothing. Yes! Why do I say that? If they had gone to the federal government, they wouldn’t get anything. They came together and formed PETAN, not even with the aid of NCDMB. The NCDMB is a recent phenomenon. The guys really fought hard on themselves, and they are progressing.
Now what they need to do is to continue in their struggle and also carry along other Nigerians coming. The way Nigeria is today, if you wait on the federal government no help will come your way. So our local service firms should study how the big multinationals came around, and I can tell you that.
The big firms you talked about: Baker Hughes, Schlumberger, Halliburton and others actually started as small companies like the PETAN companies. But they eventually came together; different firms came together to form those mega companies. So, there were mergers and acquisitions towards consolidation into the big service firms that now dominate the world.
Here in Nigeria, we have over 200 companies competing for the same thing! So, I hope that someday, bigger firms like Oilserv will merge with another EPIC company to jointly grow in size and capacity.
Here in Hobark, there is internal consolidation among the subsidiaries and business units. There is internal cross patronage that retains capital with the group. That is internal growth. So, other PETAN companies can explore the growth route through mergers and acquisitions. There is urgent need in the sector to diversify corporate structure of companies in the service industry, and not just one person at the head.
Merging will sustain the gains we have achieved locally mainly by internal growth. And pursuing inorganic growth requires having the mentality of sustainability. That entails that you bring other people that share the same dream of driving the business to sustainable growth. That is how the oyibo people merged to form all the big companies that we talk about today.
Then a successful merger must come in such a way that the businesses with related interests are coming together to complement one another in a way that will sustain what have been achieved and continue to grow. It doesn’t matter who is the CEO as long as the shared objective is achieved.
Coming back to your question, I think that for the local service providers to sustainably displace the multinationals, they need to start looking at growth. And that is not just single growth; it must be a growth that would spur proportionate growth in other industries.
If you were at SAIPEC, you will notice that there is a pattern of growth among the indigenous service companies. Yes, they have all indicated some level of growth but their growth is still very vulnerable. That is the kind of growth people should avoid.
If you have something that you think is overgrown, then you must integrate into a larger group. There is no need carrying it along. If we want to compete with international companies, we must think and act like them.
Finally sir, what is wrong with Nigeria? Why is growth so slow paced?
The main problem is our choice of leadership. We choose the type of leadership that we want, and they deal with us the way they think we should be dealt with. We don’t have a very progressive mindset in Nigeria. It is all about me, me, me; not us, us, us. So if someone’s interest is protected in what he sees wrong, he allows it to happen. That is not right. But if we insist on what is right, then everybody will benefit from the process.
So, we need to reset our mindset. A good mindset will make us choose good over evil. That will make us choose a good and honest leader over a leader that promises heaven and delivers hell.
If you look at it, good leadership can actually address all the things you asked me today. School leavers are not getting the right skills to readily join the workforce. A good leadership would have taken the appropriate course of action by not building new universities but going to existing universities and trying to improve them.
Of course, there is urgent need to bring down inflation. In our days, my mom brought us all up with her small salary as a school teacher in Aba. Our father died when we were very young. She was able to do that because inflation was not what it is today. She was not a trader and she refused to remarry. So, she did all alone with her meagre salary.
So, a good leadership should have the responsibility to control the economy in such a manner that salaries would solve family problems; and low income earners are empowered to take family responsibilities.
Right now in the UK, inflation is getting bad, people are suffering and there is crisis all over the place. People are now asking for higher salaries because inflation is catching up with wages. But if you give higher salaries, inflation will respond to that. So the UK central bank is trying to bring down inflation, not pay higher wages. That would be a sustainable way to restore value to the wages of teachers, miners, railway workers and make them stop asking for more money.
So, all the things we talk about boil down to enthroning good leadership and reorientation of national mindset. Resetting the national mindset is a function of well orchestrated civic orientation which must be inculcated in the citizens from early age.