If Nigerian Content Act is well orchestrated, the success factor will be quite significant-Chijioke Igwe
Chijioke Igwe is the Vice Chairman of Aveon Offshore, a world class Engineering and Fabrication company that provides construction and general fabrication services to the Nigerian oil and gas industry. In an interview with Frank Uzuegbunam, Editor, West Africa Energy, he spoke about how Nigerian Content initiative is driving indigenous participation in the oil and gas industry, the recent completion and shipping out of Foundation Support Structure (FSS) for Egina project, amongst other issues. Excerpts:
Can you tell us briefly about Aveon Offshore?
Aveon Offshore is a wholly indigenous fabrication company located in Rumuolumeni in Obio Akpo Local Government Area, Port Harcourt, Rivers State. It used to be a South African company called Grinaker LTA (GLTA). GLTA was created in 1999 and by 2007, the South Africans decided that they wanted to leave and sell the company as a growing concern. A number of Nigerian investors came together, set up a vehicle and bought off the company from the South Africans and renamed it Aveon Offshore.
What will you say are the achievements since the take-over of the company from the former owners?
The company has grown in size significantly; the infrastructure in the yard have improved and increased.
We have made substantial investment in the yard; the fabrication yard has grown in land size from 30,000sqm to 280,000sqm of land with a 200 meters waterfront and 100 meters jetty of 9 meters depth and 6 meters water draft at low tide. We have over 14,000sqm of covered fabrication space and office accommodation of over 3,000sqm.
We have added a slip way to enhance our service provision to the industry. Effectively, over the past 6 – 7 years, we invested close to $100 million to enhance its capability and ability to produce sophisticated and complex structures for the oil and gas industry.
The yard today can stand toe-to-toe with any other similar yard in any other part of the world because of the significant investment that has been done in the yard which is on the back of the Nigerian Content laws.
What are the challenges?
The challenges are obvious; lack of basic infrastructure, roads, power supply. They have been major setback and contributed to the fact that the structures built in that yard are more expensive than equivalent structures built anywhere else around the world because the basic infrastructure are in very rudimentary stage. In addition, we have to spend a lot of resources and efforts for human resource development to enable them acquire necessary expertise and ability to execute these works locally.
So we can say that Aveon Offshore is a product of Nigerian Content initiative?
No doubt, Aveon Offshore is a benefactor and has grown significantly as a result of the Nigerian Content regime that is prevailing in the country right now. For sure, Aveon Offshore will not be the size it is today if those enabling laws and regulations were not in place to support the growth of the company.
There is room for a replication of Aveon Offshore in different parts of Nigeria. The enabling laws are there, the major impediment today is that there are no projects. The industry is going through a downturn and as a result of that, activities that will stimulate Aveon Offshore are not there.
Apart from the Nigerian Content Act, do you see any other policy that is helping to shore up indigenous participation in the industry?
The Nigerian Content Act is quite broad-based because it cuts across human resources development, banking, insurance, fabrication, engineering; it cuts across a wide variety of industries so if the regulations are well harmonized and orchestrated, the success factor will be quite significant.
Implementation of Nigerian Content Act would go a long way in the success of the participation of Nigerian companies and human resources in the industry.
A lot of the structures and works that are being done locally now were done outside the country. So we lost the benefit of having the revenue that was being expended on all those projects. We lost the benefit of that being used to contribute to our local economy. With local content, you have a lot more significant Nigerian participation in every aspect of the growth of the industry.
Recently, you announced the successful completion of the fabrication of Foundation Support Structure (FSS) for Egina. What does this feat mean for Aveon Offshore?
Aveon Offshore has been significantly involved in the fabrication of subsea structures for the oil and gas industry for deepwater application. Till date, the facility has built over 25 subsea structures for deep water applications. The structures we just loaded and shipped out are foundation structures for the Egina project which are going to support the manifolds still being built in the yard. Those manifolds are some of the most complex structures for deepwater applications anywhere around the world and the fact that we were able to accomplish the fabrication of the structures within the facility in Nigeria is a testimony to the success of Nigerian Content policy of the federal government.
We are in the era of low crude oil price; projects are either being suspended or abandoned. How is the development affecting your company?
We are going through a very bleak period; because of this lack of projects the growth the company has seen over the past 5 years is suddenly going to be stagnated. In addition, we do not have projects to sustain even the achievement we had in terms of the expansion of the facility. If we do not have projects to sustain it, the yard is going to disappear. That will be a tragedy in itself that the facility of that nature that has received significant investment and effort to grow it to the state which it is, will disappear from the landscape. That risk is there. Without the project to sustain the facility, it will go out of existence.
Is Aveon Offshore involved in any kind of Corporate Social Responsibility (CSR)?
We have very strong ties and progressive relationship with our local communities. Our growth and survival is linked to the growth, survival and progress of the economy of the communities. We always understand that the community needs the company and the company needs the community. Once we understand that our destinies are interwoven, you have a more reasonable and pragmatic relationship where you work together to defend the interest of the company and community. So the protection of the facility is part responsibility of the community and the protection of the economy of the community is part responsibility of the company. In this way, the community and the company do everything to ensure the survival of each other.
So what are you doing differently with your CSR?
Our key focus with CSR is sustainability and inclusiveness. It is not a question of throwing money at anybody but sitting down with the community and drawing up a long term development plan after due consultation with all the stakeholders. In addition, we ensure that there is balance; making sure that it is not only one segment of the community or one association within the community that benefits but the entire community. That way, no part of the community is left out. So whether it is education and the employment of the children of the community or development of infrastructure within the community, no one is left out. More importantly, our interventions cut across social, economic and environmental.
Five years from now, where do you see Aveon Offshore?
Aveon Offshore has the dream of becoming not just a fabrication yard but evolving into a fabrication and installation company. That means that if the fortunes of the company turn around and there is boom cycle again, we hope to grow it into a company that can fabricate and install the structures that we build which in effect will mean growing into an Engineering, Procurement, and Construction (EPC) company. At the appropriate time, when the opportunities are there, we can tap into partnerships and relationships to cover the entire EPC spectrum.