World Report

Emeka Ene
Managing Director of Oildata Wireline

‘Our clients have been our greatest sales team’

Could you tell us your background and how that has prepared you for the position you are currently holding, as MD of Oildata Wireline Services Ltd?

My background is in Mechanical Engineering. I am a trained mechanical engineer. I started out by trying my hands in manufacturing and auto engineering, and ended up in the oil and gas industry as a geophysical engineer working for a multinational. So I did the rounds; I travelled and worked in different parts of Africa and Europe, in places such as Italy, Libya, Senegal, Cote D'Ivoire, Tunisia, Gabon and Cameroon, and ended up in Nigeria. That, coupled with my ethical and spiritual foundation, was the momentum and the idea behind Oildata, which is essentially to provide technology-driven services to specific areas in the industry without necessarily confining the services within any particular geographical boundary.

It was a crazy idea at the time, a God-given visionary quest; we were the only local service company in our business segment at the time and there we were, knocking on the doors of Chevron, Shell etc, in order to get work. We were the first to introduce the concept of "rigless workover" in West Africa; the possibility of squeezing oil out of old wells or abandoned fields without using traditional rigs or equipment. This made our beginning all the more challenging at the time.

Let us look at the company itself. Starting operations in 1994, the company has grown rapidly as clients such as Shell, Mobil, Chevron and many independents have adopted these techniques for their marginal and mature oil and gas fields. Please tell the readers what the company does and what have been the keys to success over the last 11 years?

In a nutshell, we fix bad wells. Most people tend to think of oil as existing in a pool or reservoir many kilometres into the ground. You stick a pipe in the pool and suck or pump the oil out. However, the reality without getting technical is that most hydrocarbon reservoirs produce mixtures of water, oil and gas in varying quantities and of course all oil companies want to produce oil and not water except they need the water for enhanced oil recovery projects. An oil well or field may produce more water or gas than is desirable after some years of production. Typically, you will bring a work-over rig in, shut the well down, fix the problem and then continue to produce oil. This costs money and rigs may not be readily available.

Essentially, what Oildata does is to look at the well the way it is. We lower electronic sensors or tools into the well at the end of special armoured cables with data acquisition computers at the other end on surface. The measurements from these tools help to identify the source of the water produced down hole or the root cause of the problem. Once the problem has been identified, we install various mechanical devices or chemical resins in the well to isolate the unwanted water or patch any holes or damaged sections, preferentially producing the oil.

Without bringing a rig in, we save costs for our client. By doing it upfront, we save time and therefore money. So we give the companies we work for huge cost savings, while we add value in our focussed niche. This process covers fixing bad wells, bringing old, abandoned , brown and marginal fields back to life and acquiring data or monitoring hydrocarbon reservoirs continuously with permanent sensors on newer, multilateral, horizontal and subsea wells.

Your second question was about our keys to success. While I cannot give you a cut and paste answer, some of the things which come readily to mind are, our vision and focus on excellence and getting things done right first-time. Our associates, our employees are called associates. They are our partners in a shared vision and today we have in Oildata, some of the smartest, creative and most productive engineers and technicians and support people. Above all, is a reverence for God and an ethical foundation based on Christian values.

You introduced new technology into the sector at the time and you quickly saw amazing growth in the oil industry dominated by multinatonals. What do you see as the major achievements of your company in this regard?

One of our landmark successes was in Ghana. Ghana as a country produces some oil, but this is not common information or common knowledge. At a time they had tried to achieve this through feasibility studies done by different multinational companies and the conclusion was that it was not a viable option to produce a small abandoned field located offshore in that country. We proposed the "rigless workover" approach in 1997 to convince the National oil company and their partners at the time that this could work. It took us 3 years to convince them. Today, with their partners, they are finally producing oil again.

We have also gone into other areas which were "no-go-technology-areas". In Nigeria for example, statutory requirements for multiple completions restrict oil companies from simultaneously producing multiple zones. Oildata has tools which are used to perform remedial work in the so called "short-string" zones. These tools are used to navigate through the complexity of the hardware restrictions downhole to improve oil or gas production from the well. We did a project in India recently, for example, where we isolated individual production zones in wells offshore with very limited equipment foot-prints and logistics.

Going by what you said, technology input has played a leading role in the success of the business, how do you manage to stay at the forefront of the technology used in the Oil and Gas Industry?

The key challenge or strategy has been to focus. Focusing made our competitive advantages visible. We have not tried to be a general multi-purpose "do-every-thing" company. Other companies, even the multinationals, replicate some aspects of what we do. In order to create a differentiation, we had to focus. We were then able to focus on solutions within the narrow areas of rigless work-over technology. In more recent times, we have been able to diversify around the same central area.

We also wanted to form a good technology and experience base in order to keep abreast with technology and best practices in our industry. We are very active in technology-based professional organizations such as the society of petroleum engineers, SPE, which provides access to technology, experience and best practices, particularly off-the-shelf technology. We also cooperate in various ways with some of the big multinationals in our industry.

One of the other things we do is to tap into industry-specific technology centres. For example we developed a tool called the Thermal-Epithermal Array Neutron tool a few years ago, which we could not build in Nigeria because the technology infrastructure is still limited. We were able to contract a company to build the tool for us in Dallas. We retained the rights to the technology.

We are in a global industry and engineering is a global business. You can design in Houston and build in China, without it being unusual. This is the strategy we have adopted for technology development.

Looking into Nigeria more specifically, you have been part of many projects in the industry with Chevron and so on. What projects are the company currently working on?

We have been working for Chevron since 1994. We are currently doing the sub-sea upper-completions for Esso in deep water Nigeria. We are providing the permanent monitoring systems for that project. For Shell, Agip and other clients, we are providing various logging and cased-hole services including perforating and water shut off services.

How does a company like Oildata actively search for new projects and clients?

Where tenders are published, we go through a pre-qualification, technical and commercial due process. In the Middle East and other areas such as in India, Malaysia or Oman, bids are also published; however, the detailed process of pre qualification varies from place to place. We have built a sales team which looks continuously for opportunities in our niche.

In this respect, You are a Nigerian company with a global outlook. What is the vision behind this international perspective?

Essentially, we set out from day one to be a globally competitive engineering service company. We recognised that the oil and gas industry is a global industry and the standards and expectations of our clients are the same in China or Alaska. Secondly, because we are operating in a niche, which has only so much value, we have got to look horizontally across the industry to see where else we can create value. Thirdly, most of our competition is multinational in nature, so we had to also explore ways to cooperate and work with them across the industry.
What we also found out is the tendency for the client you work for in one place to want you to do the same for him somewhere else. Unless you are ready to do that, you miss that opportunity. In this respect our clients have been our greatest sales team.

Do you have a strategy for a network of international technology bases ?

Yes, we have a regional office in the Middle East, we have someone based in India looking after our interests there. We have a small office in Houston which provides client support. Some of these projects take up to two years to actually get done. So it is a process that takes time and to deal with this, the regional offices in these areas work on these opportunities as they come along.

Focusing a little more on West Africa, you have mentioned Ghana and you have some people looking at Equatorial Guinea and Angola. What are your aspirations in terms of operations in the West African region?

The West African region has a lot of potential. If you combine Nigeria's, Equatorial Guinea's and Angola's oil together, you can see the huge upside potential in the Gulf of Guinea. Most operators believe that Nigeria's Deep offshore potential is underdeveloped.

In terms of off-shore weather conditions, compared to the Gulf of Mexico, deep water West Africa is a relatively quiet environment. There are no hurricanes or sub-zero temperatures like you have in the gulf or the North sea. We have deep-water reservoir temperatures which are less that 250 Fahrenheit. We have low reservoir pressures compared to the Gulf of Mexico where operators routinely encounter high temperature, high pressure wells with up to 20, 000 psi. So, in other words, deep water Nigeria is a "walk-in-the-park", comparatively. Once we overcome the challenge of understanding better the deep-water exploration geology of the area, the reserves growth will be phenomenal.

In fact, my understanding is that the limiting factor today is not the environment, but the lack of availability of deep-water rigs. Therefore, as a service company in this area: Equatorial Guinea, Angola, Cameroon and all the way down to South Africa should potentially be the market. There are barriers of trade across Africa; travel and movement of goods across Africa is still a challenge. However, it does not remove the fact that potentially, there is still room for growth.

Which specific steps do you intend to take in the near future in terms of African expansion?

We believe that if we are going to add value in the industry, that value can be added in Nigeria or it can be added in any other niche market anywhere else.

Secondly, we think that local content is not just a Nigerian thing. It has become common to talk about local content in most developing oil regions including West Africa. We think that it is time to develop appropriate partnerships with local partners, to build Africa companies which are local in every respect. This way, we are not extended beyond our capacity. We are still a small company, but we have a big vision in this respect. We recruit the best people wherever we operate and this includes other Africans as well as other nationalities

A great part of the policy of local content at a continental level in Africa is the idea of building technical capacity. How can companies like yours contribute to building technical capacities in Africa?

NEPAD and many of the initiatives coming out to develop Africa will survive and make a difference if the private industry engages. Look at the North American Free Trade Agreement (NAFTA) for instance, without engaging private enterprise in a realistic manner it would only have been politics at best. I think to a large extent, finding the entrepreneurs who are ready to take risks will be crucial to the success of such programs; because it is a significant risk. In most cases, when equipment is moved across borders, a business man cannot get insurance. We cannot get banks to finance these projects because most of the banks are set up to operate only within a particular country. So you see that at some point in time entrepreneurs have to take risks.
It will require larger inter-governmental initiatives such as NEPAD to encourage and guarantee such cross border trade.

There is also the potential for cross border development and integration and this has to grow. Currently there is a lot of duplication across borders in Africa.

For example in Equatorial Guinea, if I stand on top of a building in Port Harocurt and gaze south on a clear night, I can see Malabo. However, when they need a Slick line Operator for an emergency operation, they fly the guy in from Aberdeen, whereas they can get hundreds of Slick line Operators in Port Harcourt, both locals and Expats.
Port Harcourt is just a 45 minutes flight from Malabo. Technical capacities can expand rapidly across the continent if cross-border business thrives and companies such as Oildata can play an important role in such a process.

The renewed focus on economic development in Nigeria has strengthened the commercial partnership between Nigeria and the UK. This is especially evident in the O&G Industry where Indigenous Producers are forming partnerships with UK based multinationals such as Shell and British Gas. What do you think the oil services sub-sector in Nigeria represents to potential investors in the UK?

Nigeria represents a significant investment opportunity. The problem is that people appear too scared to engage. I think there is a "love-hate" relationship between business people in both countries, and this is amazing considering where both countries are coming from. People are ready to latch on to the negatives every time.
Also, there has been the absence of a viable long term business model. On one part a prospective investor usually starts the process by trying to locate a local Nigerian partner or agent. The results have been mixed because the focus has always been on people who are expected to have connections in high places and take care of visas, and not much else. Inevitably, many of such investors get ripped-off, because they don't know any better.
However, a new value-based partnership involving credible entrepreneurs, people who have invested in something with a track record and have something to lose.

Building the UK - Nigeria business-bridge also requires a perception change. The common perception that you cannot find credible companies in this area with skilled staff and technical expertise, is just not applicable any more.

To a large extent, you should look at investment opportunities like growing a pie in an oven with self raising flour. You can grow the pie a lot larger by finding credible partners to work with. The industry in Nigeria alone spends up to $8 billion annually. A trickle-down inpact exists when it comes to local content. I see this as a huge opportunity. The government has announced a 45% local content target for Nigeria next year. So the question to ask is no longer 'Are there any Nigerian companies who can take the 45%? 'But, if I am a UK based potential investor, I can find a credible partner in Nigeria and start doing business with such people over there.

As one of the credible potential partners in Nigeria and a success story in terms of local content, what sort of interest have you received from UK investors?

We have not had sustained momentum from UK investors. We have developed close business relationships with two UK-based companies over the years.

In Nigeria, in recent times, some professional technology based industry associations have emerged. Organisations like PETAN (Petroleum Technology Association of Nigeria), for example.

I know that in Aberdeen, similar industry groups exist. What has failed to happen is the connection between such groups, to facilitate cooperation and business development. I believe that such a private sector driven connection will fast-track the "matchmaking" process.

One of the reasons why international investors have shunned Nigeria is this perception that the country is a risk market due to a number of factors. We have been working very closely with the Nigerian Stock Exchange on their International Road show programme. As a company that attends these international Road shows, how can OilData continue to re-educate investors and attract Nigerians in the Diaspora back to invest in the industry in Nigeria?

Let us look at parallels: China readily comes to mind here. The Chinese finance market is generally fragmented. In fact, you cannot borrow money easily as a start up entrepreneur over there, which is a situation very similar to the case of Nigeria. At one point, it was risky business to invest in China. But if you look at Chinese FDI, 75% of that came from ethnic Chinese overseas at some point. This is not commonly known.
Again, looking at the Chinese model, finance credit is mostly one-on-one. The message of course is that bankers every where deal with people whose character they know.
During the first year of business, we had a problem opening a bank account. We wanted money from the bank and they promised us money, but they insisted that we got a contract first, which we couldn't get without proper funding. So they put us in a catch 22 situation. We got the contract eventually and had to open the account locally because the bank manager took a risk in backing us based solely on character.
It is the same thing when the Nigerian Stock exchange presents Nigeria as a good place to invest in. Push the good and viable face of Nigeria to the world and people with good business intent will come here. The country has a vibrant entrepreneurial private sector with a lot of good people. If you use such people as vehicles, to a large extent you mitigate the business risk.

What is your opinion on NEPAD, Pan-African co-operation and also of the roles of non-African countries in bringing development into the continent?

Surely, non-African countries do have a big role to play. We are in a global economy. For example, I read in papers not too long ago that there is now a direct postal service between Nigeria and Benin. Prior to this announcement, if you posted a letter from Lagos to Benin, it went somewhere else first, maybe some where in Europe, before it found it's way to Benin.

Francophone and Anglophone countries in Africa need to remove the artificial economic barriers limiting trade between the two blocks. To a large extent, the commitment of Prime Minister, Tony Blair to NEPAD, will be more effective if he also gets the buy-in of a country like France to support the process, particularly in Franco-phone Africa.

I also believe that if entrepreneurs and investors from Africa and beyond seize the great opportunity to invest in cross-border initiatives, rapid economic convergence will be happen across the continent.

For example, in the USA during the early part of the twentieth century, the economic imbalances across different states in that country were significant from coast to coast. The wages people earn in these states of the union gradually converged by the turn of this century because of key socio-economic factors such as their market driven economy, rule of law, property rights and free trade within a large single economy.

In other words, with a growing GDP and sustained economic activity, there would always be a tendency for upward convergence of standards of living across the African continent, if you do not create artificial barriers to cross-border trade. Another example which comes to mind is the high cost of exporting finished goods from the continent. Most cargo planes fly into different countries in West Africa full and leave almost empty. Integration will help drive down such costs.

So, NEPAD can help in breaking down inconsistent tariffs and barriers to trade, which will in turn, build sufficient momentum for better standards of living across the continent.

The world does not trade with the moon or with the planet Mars, which means that the balance of payments for planet earth is zero plus or minus, depending on productivity and growth. In this respect, the differences between the rich and poor nations are defined by who ends up with more of the world's net economic pie. This imbalance is one cause of the challenges we experience in Africa. If the world is going to be a better place, if business is going to thrive, if there are going to be fewer wars and less poverty, it is incumbent on Africa and her entrepreneurs to grow beyond the political and poverty barriers and create the inevitable convergence.

When the time comes for you to step down as Managing Director of Oildata, what would you like your legacy to be?

You mean, "step-up" from Managing Director! Well, one of the things which come to mind is the firm belief that one can still do business with integrity and the fear of God even in the midst of a difficult environment.
An enduring legacy will be the investment I would have made in the lives of people to influence or inspire them to catch a collective vision, believing that they too can make a difference in the larger society.

With the challenges of poor leadership in Africa, infrastructure, and lack of accountability and so on, there is always the tendency and the pressure on small companies to do it as we say "any-how", according to "kangaroo" rules which change every day. As a company, one of the things we set out to do in the beginning was to do things the right way or no-way. We set up an ethical value-set from day one. At that time, some people thought we were crazy. We stuck by our principles, building endearing relationships through goodwill over time and operated by example, even though we lost some business opportunities in the process. We made mistakes, stumbled some times, picked ourselves up and kept going. These values and principles have remained unchanged over the years. It is therefore my desire that the values on which the company was founded will continue to influence people we come in contact with over the long term. It has always been a collective team effort cascading ultimately to future generations.

What final message would you like to send to the readers of The Independent, investors in the UK and Nigerians in the Diaspora?

I have heard my Pastor say a few times, that money tends to flow in the direction of energy or maximum potential, and off-course, minimum risk. How true.
If you are investing in property in the UK or the USA, for example, you are likely to think first in terms of single digit profits over time.

In many respects, Africa is still virgin territory. If you are a businessman with an international outlook and you are not yet playing in Africa or have at least the continent as part of your investment strategy, then you are likely to lose-out in the next big growth wave.

Whether it is investing in property, telecoms, real estate, or oil and gas; our continent is open for business and savvy investors are already recording double-digit growth.

Therefore, the underlying message is that lingering and out-dated perceptions need to change about Africa and Nigeria in particularly. Perceptions tend to be limited, artificial and subjective, defined by limited exposure or information about a place or people. There really are no significant differences between different people where ever they come from. My advice is to look closely at the potential that abounds here. Do your homework; find credible partners to deal with and commit to a long term investment strategy.
I urge them to come and engage with the right people here, and I believe they will not be disappointed.

Eng. Ene, thank you for your time.

Thank you.