New possibilities position Aveon Offshore in good stead

Globally, oil service companies have had a rough run for the past two years, even worse than the oil companies since the global crude oil prices plummeted. However, with the new OPEC production output cut deal in place and non-OPEC producers co-operating, there are signs of moderate rebound in prices while exploration and production activities may actually be on their way up.

“There is silver lining at the end of every tunnel and it seems we have come to that point in the oil sector. We may not hit the $100 per barrel so soon but the outlook is pretty good.  We are beginning to hear conversations about adding rigs or pushing on with exploration. I think oil firms will soon get back to business”, said Chijioke Igwe, Vice Chairman, Aveon Offshore, a world class engineering and fabrication company that provides construction and general fabrication services to the Nigerian oil and gas industry.

Aveon Offshore was not insulated from the downturn in the sector.

“Low oil price equals lack of projects and that means that the growth we have seen over the past 5 years is suddenly stagnated. If we do not have projects to sustain it, the yard is going to disappear. It will be a tragedy in itself that the facility of that nature that has received significant investment and effort to grow to the state which it is, will disappear from the landscape. That risk is there”, Igwe added.

But that does not mean that the company is not managing keep in good shape amidst pushing new frontiers and possibilities. Recently, it announced that it has successfully completed fabrication of six Foundation Support Structures (FSS) and loaded out these components in respect of the Egina Subsea Production System (SPS) project. The load out and sail away of these structures occurred at the end November 2016.

“The successful completion and delivery of these subsea structures showcases the capabilities of our experienced team and our capacity as a local fabrication yard to deliver complex oil and gas projects meeting safety and quality standards as well as validating Nigeria’s local content vision” said Tein George, Chairman, Aveon Offshore Limited.

Aveon has already delivered some of the project scope including sixteen Umbilical Termination Boxes and subsea tree fabrications (Frames, Permanent Guide Base and Gasmats) throughout 2015 and 2016. The fabrication of remaining subsea tree fabrications will be completed for delivery by the end of the first Quarter of 2017. The fabrication of six Manifolds is also close to completion which will allow delivery during the first half of 2017 together with five completed Subsea Distribution Modules. Twenty one multi-bore production well jumpers will be delivered throughout 2017 and 2018.

Every vertical industry presents unique supply chain challenges, but none is as complex as oil and gas. Transporting product requires special equipment, strict regulatory compliance, and extensive safety procedures. It often requires multiple modes, and involves everything from supplying materials for oil rigs to moving extremely heavy equipment.

Aveon Offshore Limited, a fully Nigerian owned engineering and fabrication services company was awarded the contract by FMC Technologies for the fabrication and load-out of approximately 5,000 tons of subsea structures including six manifolds with associated Suction piles, various subsea tree frame elements, jumpers and control systems for the Total Upstream Nigeria Limited (TUPNI) Egina Project in 2013. The project is being executed by Aveon Offshore at its 300,000 Sqm fabrication yard in Rumuolumeni near Port Harcourt.

In order to accommodate the workload generated by the project, CAPEX investment was made by FMC Technologies and Total upgrading Aveons’ site in Rumuolumeni. As a result a dedicated Carbon Steel workshop, Duplex welding facilities and Painting workshops of over 8,000 sqm, Electrical power and  distribution and more were added to the yard’s existing infrastructure and existing premises such as Quayside were completely reinforced. The project has generated more than 3,000,000 productive man-hours in the last three years.

Aveon Offshore 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.

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.

“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”, said Igwe.

Part of the company’s growth has been attributed to the Nigerian Content initiative of the Federal Government. Aveon Offshore is a benefactor and has grown significantly as a result of the Nigerian Content regime. 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. With local content, you have a lot more significant Nigerian participation in every aspect of the growth of the industry.

“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 and as a result of that, activities that will stimulate Aveon Offshore are not there”, said the Executive Vice Chairman.

A lot of the structures and works that are being done locally now were done outside the country. The country has lost the benefit of having the revenue that was being expended on all those projects and the benefit of that being used to contribute to the local economy.

The challenges, however, are obvious; lack of basic infrastructure, roads, power supply.

According to Igwe, these challenges “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”.

But despite, the challenges, Aveon Offshore is looking up; it 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 cover the entire EPC spectrum”, he concluded.

FRANK UZUEGBUNAM