Nigerian Content Act has increased our operations, earnings – Global Oceon Boss
Oluwaseun Faluyi is a mechanical Engineer by training and the Managing Director of one of Nigeria’s foremost offshore engineering design companies, Gobal Oceon. As with most Engineers Faluyi can best be described as media-shy.
However it became imperative to draw him out of his shell and engage him on a number of industry issues in Nigeria especially as we tend to take a critical look at the Nigerian Content Act which became law about 2 years ago and this cannot be achieved without looking at Offshore engineering, a field Where Faluyi’s company operates and where we don’t find many Nigerian companies operating at the moment as that may be another plus for the Nigerian content Act.
He told Biztellers in this exclusive interview how important the Act is to the development of the Nigerian Engineering industry as many companies which hitherto had been dormant for want of jobs are now posting profits and competing with their foreign peers. He also touched on challenges still faced in the Nigerian oil and gas industry and suggested ways to tackle such.
Can you tell us a bit about yourself and the company you represent?
I’m a mechanical engineer by training. I started out by being a facility Engineer, I then went into management consulting, I worked with Accenture and while with Accenture I was leading a project team, I have worked with what we call natural resources clients which are mainly of oil, gas and power.
I had the opportunity then of working with clients like NNPC, and headed the strategy team that was looking at projects phase and how to implement among the various arrow heads that NNPC had.
But while we were there, we were also looking at Nigerian content, and how it is that the Nigerian content could be developed within. The Nigerian content at that time was still a policy that NNPC had and while assessing in-country capacity it became obvious that there was severe lack of capacity in-country, and that more needed to be done by Nigerians.
It wasn’t just legislating, it was something about building capacity, I then took the step, to leave consulting and enter into Nigerian content development body, in engineering design, and the design according to policy then is supposed to be 100 percent Nigerian domiciled, other parts of the value chain they still had some differences, engineering design is supposed to be by Nigerians fully, it’s something that I took up as a challenge then, and then started up Global Oceon.
Global Oceon is actually a company that was started by Petrolog. Petrolog has been in operations in Nigeria over 30 years, and they are well known for mud logging, they are into drilling, and they have operations outside Nigeria in places like Venezuela, Costa Rica, and there main office is in Houston, so they have a long track record of operating businesses successfully.
The Nigerian content bill was still been pushed in the industry and Subsea 7 had asked Petrolog to set up a company that will do engineering design for them and they decided to start up this company and I was the MD that pioneered the operations of the company.
What are the core specifics of Global Oceon in terms of operations?
What Global Oceon does is not just to engineer design, which is general, very early we decided to focus and establish the need for ourselves to identify that which reminds me of a lot of soul searching, brain storming sessions and we had. We eventually settled that we will be an offshore engineering company, we will not decline working onshore, basically it will be offshore.
The reason we choose offshore was because offshore engineering was dominated by expatriates, international engineering companies and going offshore is one area where companies are starting to look at in Nigeria. As regards onshore there was problem with security, it was more and more logistics issues, but offshore, was one that is still virgin, it was still new and it seems to be offering more returns.
But we didn’t have experienced Nigerians in offshore, so it is in a place where we will not have so much competition domestically but we will have fierce competition internationally, but we said we will not be intimidated by that, what it meant is that this is an opportunity to prove that Nigerians can do something in a an area which had been exclusively non-Nigerians.
We have been operating now over four to five years, and the experience that we have had is one that is really gratifying. When we started it was something that was so new, not only in Nigeria, but in the world. We had a lot of problems convincing people on our capacity and credibility.
Offshore engineering started within our own life time, it’s in the north sea that we have offshore development, Gulf of Mexico, Gulf of Guinea, we don’t have plenty of offshore in the world, so to have people who really know about offshore, you really have to check like which company is it that knows about it.
Positioning ourselves in that space was something that took a lot of courage, but even though at first we were looking out as if we didn’t know what we were doing, we were given little bits of work just to try and see how we could do it, we got some jobs from Shell, Mobil and just those little bits of work they gave us, they commended us that we did a terrific job on those ones, for us it gave us more encouragement that we will continue, we had invested a lot in this country, we had invested a lot in terms of facilities and also in technology, computer, software and hardware, we bought licenses, we have invested a lot in people, we decided to set high standards that the people we recruit will be the best graduating students, and it means that we needed to pay a little more to attract them and retain them.
All of these are investments and we have seen the returns in terms of our activity, in terms of the quality of work that we are doing, in terms of the growth that we are experiencing, the early days were rough we don’t doubt that but now we have clients that are saying oh we are doing a fantastic job, just this morning after management meeting, we were discussing about a job we did for Mobil, maybe I should back up a little bit.
The reason why offshore engineering is so challenging is because, it has less tolerance for errors, you cannot be a mediocre and survive it, if you are going to design a pipe and install it deep in the ocean, you cannot say you made a mistake and want to loosen one nut and then tighten it or do it well, it just doesn’t happen, and in the environment, it will be delaying facility as well, it’s also subject to ocean waves forces, it is subjected to weather forces, those weather forces and they are really ferocious and if you are going to be doing anything that will withstand the elements of nature there, you have to know what you are doing, you cannot say you are experimenting, you have to get it right the first time, the only type of engineering that we can compare offshore engineering to is space engineering, because you can’t just send a man there, the environment is very hostile, and you can’t afford to get it wrong, because if it goes wrong, it is going to be expensive, people will die, we all know about the rig that blew up in the Gulf of Mexico, the problems in terms of people, in terms of environment, in terms of the company reputation, and that type of thing is not something you live up to for experimentation but we have done from what we were talking about this morning, a particular job for Mobil on pipelines, we did the design, we did the design of the lifting, placed it and its working perfectly, and it was like ordinarily the engineers from US, engineers from Europe but this was done Nigerian engineers that has not even travelled out of Nigeria.
The type of work we are doing is noble standard, for me I will say it is gratifying and at least you can see that these are Nigerians who are doing what their contemporaries in other countries can do, and they are doing it just as well and even better, in fact if you have time, I can take you around to meet the people, you can see them, feel them and talk to them, and these are not expatriates, but these are Nigerians who schooled in Nigerian universities, who schooled in Ado Ekiti, Abeokuta, UNILAG, etc. they grew up in the same neighborhood we did, but the kind of work they are doing is the kind of work, that you will think is coming from Houston, Australia, the UK, this is the kind of work that Nigerians are now doing, so in terms of Nigerian content, you will see that it’s not a plea for Nigerians it’s just a challenge, Nigerians can sing to other countries that if you give Nigerians chance, they will do it and do it well, even if we haven’t done it before, it doesn’t mean we will not do it well, it just means we have not done it before, and there is always a first time and we are just pleased the engineers we have are showing that Nigerian content is actually a good policy.
What about training and HCD how do you tackle this?
We do not assume they know what they are doing, we do not have Nigerian offshore engineers so for start the standard policy is we take the best engineers that Nigerian universities produce, and then we will train them, so every individual goes through training, in addition to on-the-job training we give, for one year everybody goes through the competence training that we have specifically designed for ourselves, we don’t offer it as a commercial training but for our people to become competent and do the job to the standard that we want to do it.
Is the training certified?
It is ISO certified, we also presented it to the ITF, the accessed training for federal government, and they also acknowledged that it is a specialized training, and this is something only we can do.
We can’t just get any training provider with a brief case, just come and say he is training. something specific, pipelines and facilities for offshore if you are going to talk of the kind of terrain that is under water, and the type of soil conditions that is underwater, the kind of wind forces that is in several kilometers offshore, you really need to know what it is all about and we have got, the authorities who do certification, developed at it and said that it produces really outstanding engineers and we also send people to work at our partners offices abroad.
Does your modus operandi involve field presence in any way, or you do engineering from the confines of your office alone?
What we do is called EPC as in engineering procurement and construction management; we do it for EPC companies.
The contractors usually get the job because in Nigeria, must contract strategy for most companies is that they work with accountability, this is just a construction of a pipeline or a field, one person should do it, EPC companies will say let’s do the design, they will now say people who do designs come and monitor and make sure that what it is you designed actually works, if it doesn’t work you have to make the adjustment before you leave, so we do that, we send people to the field.
What are the notable challenges your company has face operating in the oil and gas sector in Nigeria?
So many challenges, one I will say is market acceptance for the production companies to accept that there are Nigerian companies that can do the job professionally and to a world-class standard. Second is the people; you need to get people because they don’t teach offshore engineering in Nigeria so we have to teach it ourselves. We invest a lot of effort trying to get good people.
It’s about getting and maintaining the proper standard. We do not manage because it can result to expensive mistake. I will say in our own environment quite a number of people manage, they just say, let’s just try and for us we have to constantly fight it, whatever it takes to dilute our standard we go all out against it. We do not managing as it could result to a very expensive failure, we have an IOC qualified in certified management, a system in place, it also monitors, it doesn’t wait for a problem to develop before it reacts to it.
Those are the main challenges I will say we face. Maybe one other thing I will say we face is retention because our standards are very high, it means that a lot of other companies will say once it is an Oceon staff, you don’t need to do much interview, they will go like why will an Oceon staff want to leave so let’s just do more than what you have been getting. If you are looking for good engineers you can find them among those doing offshore engineering. We pay a little more than our peers are paying. We have pulled out a culture where we make our people feel and know they are doing something that is not just for themselves but for Nigeria.
By virtue of its partnership can we say Global Ocean is wholly Nigerian?
It is 100 percent Nigerian, it is owned by Nigerians. Whatever equities there are is just technical partnership. They provide us with staff. Who do what we call mentoring, and we pay them for those mentors. We have our Nigerian engineers do the work and the expatriates study what they do. If they make a mistake, they will correct them.
If they do it well they would encourage them and then let them continue to grow in that way and then build our skilled race, that’s how it is if we’ve really got need for a massive amount of engineers very quickly. we’ve trained over… I think at the last count over 130 engineers that have been trained and gone through our development programmes and to get that much to pass through so quickly is something that you can’t say you have a lot of expatriates doing the work, it would just like block the Nigerians from doing any work and getting their hands started.
Can we look at the Nigerian Content Act, what is your assessment in terms of impact on Nigerian businesses.
The Act is a good thing and it’s a great development for Nigeria and Nigerians. Wish we had it earlier but then it is never too late to start. Has it made the difference? Yes it has because prior to the proposal of the Act and its enactment as law, it was very difficult for Nigerian companies to get jobs because there was nothing that really pushed the IOC’s in Nigeria so it could just have people just like pounding on doors begging.
It’s because it’s like a norm that people who have a company will rather look out for their interest first than other people’s interest and if those that own the company are not Nigerians they look out for the interest of that in their country not Nigerians.
It may not be out of malice or to colonize the country ,but it’s just that they would rather help their own people just as Nigerians would help their own people, so the Act at least gave a legal basis for Nigerians to insist on what should be given to Nigerians.
Another factor is that it is giving Nigerian companies courage to act, it is just like no one cares, if you are on your own but if the federal government has detailed as law that Nigerians should get more work that means you do not pack your bags and retire any time, you keeping pounding because you know you have the force of the law with you.
So that has increased the amount of activities that is domiciled in-country, and more Nigerians are stepping up.
Now that there is law you can do more, It’s just like being faced with a situation where there are so many big boys who bullied you and you are like what will I do? but if you know that whether you are bullied or not you have a big brother behind you, you will fight right back so you will not accept, you will fight right back.
If you look back and compare the Nigerian companies before the Act you will see that they are making more income now. I know for us our income has increased significantly after the Act. If you look at foreign currency it is the Act that is making a difference. The number of Nigerian companies that took stands at the NOG2012 or even exhibited or doing all kinds of work in Nigeria, you will see that there is a huge difference, and you will see that the Nigerian Content Act is the reason for the difference. Maybe our expectations are high, maybe what we are looking for is even grinder but the reality is that we have definitely moved position and that is a positive move.
What about competition with foreign companies offering services same as yours, are there challenges in that regard?
We have, and it is not something you expect that we will just get to Ethiopia, if here is Nirvana, it’s clear it’s not something those companies will go all over saying they are playing dead, they themselves are coming up, asking what they can do to force a change. So they are fighting back? Yes a number of them are not just looking at setting up operations in Nigeria if what Nigeria is saying is that they should domicile engineering in Nigeria, they will domicile themselves as well.
But not necessarily given to Nigerians there are some engineering companies that are like that, they are not Nigerians but their address is Nigerian, they themselves know that the ownership is not Nigerian, there management is not Nigerian. In Global Oceon you can see that the management is Nigerian, its Nigerians that do the work and also own the company. But there are other international companies that are changing their strategy. Another thing that has become clearer is what I will call rate discrimination in this industry.
When the Nigerian companies bid for jobs, the IOCs expects that if you are Nigerian you should be charging very low , like Nigerian engineers oh well average of 50 dollars per hour, but the same engineer that comes from outside the country will be demanding four times more as what it is that the Nigerian engineer is being paid, and the IOCs they pay and when you ask why, you will hear well they are expatriates and that just covers it, you have to pay security, relocation etc.
But all of these are really in effect discriminating and more or less depressing the market for Nigerians because if the income potential has been limited, it means that the type of quality it will attract will be limited to what it is that you can pay for and it is something I can say is structural in the industry until we can reduce the differential where you will have talented Nigerians accepting jobs in this industry and you will have this effect that Nigerian engineers are struggling to be able to compete.
How do you think this development can be checked?
It is something I think the regulators can do something about, generally, when you have a market where there is competition you will find people who are under core, people who are maybe charlatans who are not interested in the progress of the industry, who may not use quality resources and undermine what it is that will be of greater good. You have the field of many people, you need a regulator to say this is what the rules should be.
That rate disparity is something that the industry will say it’s more or less imposed in the engineering industry and if the regulator says that the people who are paying this rate, you cannot have a differential, you must reduce it, that will bring down what is been paid the expatriates and give more job to Nigerians or increase what is been paid Nigerians and bring in more Nigerians, so whichever way, we have a regulator not just checking the quantity of Nigerian man powers but also checking the value of the Nigerian man hours compared to the value of the expatriates man hours.
It will make a difference, It’s something that is just coming into focus and this is a learning course because we just started to learn, but its best to implement the Nigeria content law. It’s a great job we have implemented the Act, the monitoring Board said the next step is to monitor but now the next step is to look at the quality of what we are doing not just the volume of what we are doing, the quality of what we are doing now have to be in sharp focus and one of the ways of improving it is by sending a clear commercial signal that the people who are good will be paid what is their true value and for Nigerians who are good as expatriates will deserve to get what it is they are getting now.
The Nigerian oil industry is gearing up now for the annual Offshore Technology Conference in Houston Texas and I’m aware your company is also attending, what will Global Oceon be looking out for at this year’s edition of the conference?
We have determined that the OTC is really a gathering of offshore technology experts from around the world and Nigerian operating companies have also seen it as an event where the best in the industry, the top decision makers, the top engineers are all present, hence we want to meet with them, exchange ideas because when they come to these conferences they are more open and more keen to listening and interacting. So our basic need is to network and meet with people, get to know them, socialize with them so that by the time we come back to Nigeria, we can build on whatever it is that we may have started with them.
Essentially, the event itself is to bring people together, so we intend to capitalize on the objectives of the organization. Meet people and get to develop our networks.
Technologically what are your expectations at the conference?
Yes in previous OTC’s we have participated in, we took the proceedings because they are like innovations that they have, they also help to stimulate our own thinking because what we are doing is very new so we have to be very innovative because the more you see what other people are doing in other countries, the more it develops yours to be innovative.
We will be attending the technical sections, collect the proceedings and like the previous, we will be sharing it with our own engineers, this is what it is that is new and then we will use it to improve what it is that we are doing.
One of it is like what we did for BONGA two years ago or there about, it was immediately after OTC and at that time shell was saying that there was a structural crack that has developed at the BONGA field and they needed engineering analysis done to determine what the cost is and what the approach to fixing it is because it is on a PFT offshore because it is facing wired conditions that are so weird or say unpredictable, they had said then that it has to be done by an American company but because of the Nigerian Content Act, they had tried different Nigerian engineering companies and those ones hadn’t been able to do it just as they were going to take it, we met with them and convinced them to give us a chance and they agreed to it as there will be nothing lost as they have tried others and they couldn’t do it, so even if they try one more time, it will not change the decision to take it to America but that particular thing we haven’t done before but because we had looked at what it is that has been done in other countries, that was innovative, we decided that we will take it as a challenge and we did a lot of analysis and by the time it is that we were finished, the Shell people were very impressed.
I got a call that after submitting reports that the Shell management wants to meet with the company and initially I thought that maybe there was something we hadn’t done right for the management to want to meet with us. By the time they were finished they said they were amazed by the Nigerian Engineering company that did it. It is what I will say is innovative, thinking outside the box. So I envisaged that we will take anything that is new and use it to improve what we have here in Nigeria, so we can truly say we are a global company and that would also be our focus at the OTC.