‘Stalled marginal field bid is like locking up assets without getting value for it’

STANLEY FAGBULE is the chief executive of Selly Fak Energy Services Limited, an indigenous engineering services company with specialty in asset integrity maintenance, flow line and pipeline construction, mechanical fabrication and general servicing of the oil and gas industry. In this interview with FRANK UZUEGBUNAM, editor, West Africa Energy, he talks about the Nigerian Content initiative, stalled marginal field bid-round among other issues. Excerpts:

How will you describe Selly Fak and what you do?

Selly Fak Energy Services Limited is a wholly indigenous engineering services company with specialty in asset integrity maintenance, flow line and pipeline construction, mechanical fabrication and general servicing of the oil and gas industry including the upstream sector. We work with most of the International and Indigenous Oil Companies and we have done some remarkable jobs and projects for them.

Our major accomplishment is being able to establish a brand for the company within the oil and gas service sector such that if you mention Selly Fak with respect to asset integrity, it is a recognizable brand. Our quality of service, speed and response time is our comparative advantage

We have our main facility in Port Harcourt and an office in Lagos. Our facility in Port Harcourt is 4500sqm with offices and fabrication yard and where we have most of our equipment. The Lagos office for now is more for commercial and business development and in course of time, will engage in other things when we move our head office to Lagos by next year.

We feel that the Selly Fak brand that has been delivering quality services to some IOCs should be replicated with other IOCs. That is one of the reasons why we are vigorously pursuing our Lagos head office project. The company is well structured and certified to Bureau Veritas ISO 9000-2015. Our people are the best assets we have, and are continuously trained to global standard to achieve industry best practice.

Is Selly Fak a product of Nigerian Content Initiative?

In as much as there is no perfect law, the Nigerian Content initiative has helped us to some extent. Most of the services we render to the IOCs used to be exclusive right of some foreign companies but we have been able to break that barrier. The opportunity of Nigerian Content initiative afforded most Nigerian entrepreneurs the opportunity to delve into the industry and help with the achievement we have made so far.

What are your challenges?

One of our biggest challenge is patronage. There are so many portfolio companies with everybody pursuing the same thing, stretching ourselves too thin and cutting away margins. If 5 people that are supposed to work in the same organization spread themselves and bid for the same job, at the end of the day, obviously, the competition moves to price and we end up reducing margins. This also limits opportunities.

The other challenge is the government policy in the industry; preceding administrations had problem of not meeting cash call requirement to the industry. That affected a lot of projects from the IOCs because there was no real investment in the industry. Quantum of jobs that should have been available for vendors were hindered.

The other thing is capacity – a lot of the expertise required to perform our job in terms of personnel are not available because there is no investment in the industry. The quality of workforce in the oil and gas service industry is moderate. There has not been successive training for people to step into the shoes of those who are retiring.

You literally have to spoon feed the quality of graduates we produce these days because they lack motivation and initiative and that affects the industry too. Most of the schools are not training people to work with their hands because the focus has been paper qualification – that is affecting the quality of people in the industry. You cannot employ somebody today and that person will hit the ground running. You have to do some re-training before he can adapt and work for the industry.

At Selly Fak, we have a 2-year graduate training scheme for our new intakes. After the training, we select amongst them before we unleash them to handle our operations.

Are you equipped for the jobs you get?

We have in-house capacity for most of the jobs we get. We have a fabrication yard that can handle 110 tons per year in terms of capacity. Most of the asset integrity jobs that we do offshore are all done on site.

In this last coating season, which is dry season window, we were able to complete 3 platforms for our major clients in terms of maintenance. We have ability to do 3 – 4 spreads of personnel, equipment etc; that is deploying 3 different sets of personnel for 3 locations at the same time. We are also trying to increase that capacity to see how we can meet the demands of the industry.

Have you encountered any problem with your host communities?

We have been able to establish a very good relationship with the host community, on a continuous engagement basis, we have established a symbiotic and sound interaction with them. The basic thing is to be open and transparent with the host communities and make sure you deliver on your promises. We have strong community relations team and our community liaison officers interface with the communities on a daily basis.

We have corporate social responsibility (CSR) projects in all the communities we operate to appreciate them and at the same time develop the communities by creating economic multiplier effect by virtue of our operations The most recent one is the Ibeno community where we have assisted the Youth association them to construct Youth Centre and set up training center, we have continuous engagement with them that they see us as part of them and even protect us. Our other CSR initiatives is with Junior Achievement and Blazing Hearts Autism Centre

We make sure that most of our staff, at least 80 percent, working in a particular area are from that community. By so doing it cause a multiplier effect within the community.

What is your opinion on the exit of government from Joint Venture funding?

It is quite commendable that government took this step. In the past, government’s inability to meet its joint venture (JV) cash call requirement was a big setback. The new policy which now makes the JVs a kind of Independent Joint Ventures (IJVs) has caused a flurry activities to happen in the industry.

The impact of phasing out the JV cash call is very simple; the level of activities now is about 3 – 4 times of what they used to be after the IOCs were paid. The IOCs were being owed about $5 billion, there was a negotiation to shave of about $1.2 billion, and payment was tied to increase in production and all of them are now working on their assets to make sure they ramp up their production. That has spurred up a lot of activities in the industry and its paying off though at the detriment of exploration. It has given some of the IOCs the courage to invest because there is confidence, but ultimately the best investment government can make is passing the PIB and signing them into law so that there can be unhindered activities in the industry.

How do you see government’s failed attempt to hold the marginal field bid-round?

The marginal field issue is quite unfortunate. It was meant to take place in 2013, then 2015 and another one for 2017. None of them happened. It is like locking up assets and not getting value for it because those marginal fields apart from the fact that it will help to increase our daily output as a country, it is going to increase our capacity as a people. The marginal fields basically help indigenous players especially in the area of transfer of technology.

We have over 40 assets that is available for licensing but due to lack of action and political will, those acreages are lying down there wasting. The multiplier effect of licensing and getting the companies to operate those fields is going to generate employment and increase revenue for the government. It will also bridge some of the gaps in the industry like lack of capacity – they are avenues to train new engineers. If you have a marginal field license, you may poach one or two people from Shell for instance, they will promote people up to fill those vacancies and they will also bring in new people for those openings. Those are part of the multiplier effects and it is going to help the economy. These are avenues to really grow the industry and ultimately the economy.

Where do you see Selly Fak in the near future?

We have a very ambitious vision of where we want to be in the next 5 years. We have a 5-year strategic plan that we are following to the letter right now. We have started, we are moving in that direction and I can tell you that in another one year, we will be in 2 other African countries apart from Nigeria. Before the end of the year, we are going to open an office in Ghana. After that, we are looking at Kenya. Our plan is to open 3 outposts in African countries.

Another thing we are trying to do is that we want to diversify from services to production so we want to take the advantage of opportunity in the exploration and production space. We are bullish about the growth we want to achieve as a company. The board of directors are fully in support of what we are trying to do and 5 years down the line, we see ourselves having a good share of the market.