Samuel Olotu, the Chief Technical Officer of Lekoil Nigeria Limited, is a seasoned geoscientist with over 25 years of experience in asset management, field development, reservoir management, seismic data processing and interpretation. In this interview with KINGSLEY JEREMIAH, Olotu discusses paths to sustaining crude oil and gas exploration for Nigeria amid a decline in production and tightening investment climate, among others.

Most international oil companies are leaving Nigeria. Do we truly have the local capacity to manage the assets and sustain the growth momentum of the oil sector?
Without a doubt, Nigeria possesses ample technical expertise. Oil has been a part of Nigeria’s landscape for over 50 years since the first well was discovered. We have worked alongside international oil companies (IOCs) throughout this time. Nigerians have built infrastructure across the industry and have held key positions, including managing director roles in companies like Shell and Mobil. Nigerians have also led technical units. For instance, I served as Head of Geophysics at Shell. To suggest that I, or others, cannot perform these roles after leaving such companies is absurd. I have worked for Shell in the Middle East and the U.S. and it frustrates me to hear doubts about Nigerians’ technical capabilities.
 
However, our financial institutions may not be fully equipped to fund large-scale oil projects, as the upstream business requires a high scale of investment compared to downstream operations. Major projects, whether offshore or onshore, require significant funding that our top five banks might not be able to provide.
 
In answering your question, independent companies have a key role to play in Nigeria’s oil and gas industry. The industry is vast, and there is ample space for indigenous oil companies, which are independent. The departure of international oil companies is often due to issues like insecurity, regulatory hurdles and value erosion problems the government needs to address. These challenges affect everyone in the industry, not just international players.

Do you think independent operators are immune to some of these issues?
In the forest, they say, the elephant is so big that it cannot manoeuvre where a squirrel can manoeuvre. The IOCs have such a large footprint that incidents like pipeline explosions or bunkering severely impact them. In contrast, Lekoil has solutions that, while not scalable to the level of an IOC, are effective for us. For instance, our facility in Otakikpo has maintained over 95 per cent uptime for the past eight years because we evacuated our crude via the ocean using our infrastructure. This method is not feasible for an IOC using the Nembe Trunk Line (NCTL) over 500 kilometres long, as their exposure is immense. In comparison, our exposure is only about 10 kilometres. The amount of infrastructure needed to safeguard a pipeline of 500 or even 200 kilometres is significant.

Nigeria is focusing on gas and also planning to grow oil production. What role is Lekoil playing in all of this?
We are engaged in the exploration, development, and production of oil, all of which require technical expertise. Geologists search for oil, technical engineers model the sites to determine efficient development methods and production and project engineers build the facilities and infrastructure to produce, market, and export the oil. Lekoil is significantly contributing to Nigeria’s economy through these activities. A notable development in the industry is our increased focus on gas. Despite benefiting from oil for cash flow, we have always identified ourselves as a gas company.
 
In 2013, we made the third-largest gas discovery in the world, which underscores our potential in gas monetization.  Although we exited two blocks in Namibia due to limited prospects, our strategy is to expand our business operations across Africa.

Nigeria’s oil reserve has stagnated at around 37 billion barrels for over a decade. Are you worried?
  I’m very worried. The oil business operates on a cycle of three to five years, meaning the production we see today began three to five years ago. Also, as we produce oil, we must replace it. It is not an endless supply, much like a water tank that will eventually run dry if not refilled. The concern is valid: if exploration is neglected for a long time, production will decline. The decline we have seen in the past five years is due to a lack of exploration over the last eight years. There are bodies in Nigeria tasked with facilitating and encouraging exploration, but they have not succeeded and this worries me.
 
Other countries continue to explore, while we lag. Although we have marginal fields, not many have been developed. It is not enough to hold a bidding round; it is crucial to ensure that those awarded the projects have the knowledge and capacity to execute them effectively. This is how reserves grow, by deploying competent people.
  
In Nigeria, the initial developers of marginal fields were technocrats, as investors wouldn’t entrust their money to unqualified project managers. Unfortunately, many assets remain undeveloped because they are in the wrong hands. If you possess the technical expertise, investors will have confidence in the system. Even if local banks merge and conduct due diligence, they will not finance projects led by incapable individuals, regardless of how impressive the team appears on paper. The competency of the management and technical teams is critical.
  
Additionally, our contracting environment is problematic. The process of doing business in Nigeria is notoriously slow and burdensome, which stifles progress and kills businesses. Simple tasks take too long to complete, creating a challenging business environment.
Fossil fuel is under pressure due to climate change concerns. What do you expect from Africa, which is still discovering more?
 
Nigeria, like the rest of Africa, is rich in resources. In contrast, European nations have largely depleted their resources but have used them effectively to fuel their economies. While climate change is a pressing issue, it is important to note that Africa contributes less than five per cent to global emissions. Instead, we are helping to clean up the polluted environment created by the West.
 
Consider the population density in Africa, Lagos and Abuja, for instance, compared to the vast agricultural activities that help filter carbon dioxide. We are contributing to carbon capture. It is unfair for European countries that have used fossil fuels to drive their economies to lecture us about climate change.
 
In Africa, there is a saying: if your neighbour is eating something harmful, you should warn them. We can engage in dialogue with the West, but they must also contribute financially. Many Western countries have not made significant financial contributions to address climate change, and even those who have cannot claim moral superiority.
 
We need a collaborative approach. The impacts of climate change, like flooding, disproportionately affect third-world countries. How many Western nations have shown genuine concern for those affected by the consequences of their actions decades ago?
   In places like India, Sudan and Kenya, we see the devastating effects of climate change. We have the opportunity to learn from past mistakes and adopt better practices. Gas is a cleaner alternative to fuel, but most of the technology is held by Western countries, so collaboration is essential. Despite the push for clean energy, countries like Germany have reverted to the use of coal, revealing a double standard. They prioritise their economy and the livelihood of their people.
 
Africans must come together to address our challenges while also considering climate protection. Relying on the West to solve our problems will not benefit us. Nigeria has the manpower to train its people. Attend any oil conference in Lagos or Abuja, and you’ll see that 98 per cent of the attendees are Nigerians. It’s encouraging to see Ghanaians and Namibians here as well. We should share our experience and knowledge with them.

How strong are we on technology that can help us develop the oil sector independently?
  We currently rely on technology consumption, which is acceptable for now. China provides a good example; they once also purchased technology and then replicated it through their universities after attending conferences like the Offshore Technology Conference (OTC). There is a need for better collaboration between the industry and reputable universities. We must focus on manageable goals rather than taking on more than we can handle.
 
We should designate key centres for specific disciplines such as Geophysics and Petroleum Engineering and invest deeply in these areas. Gradually, we can develop our technologies. Nigerians are intelligent; they have already established an IT hub in Lagos. Let’s leverage this capability by fostering collaboration. After all, 60 per cent of our population is under 40 years old, and many are enrolled in universities.
 
To foster innovation, the industry, indigenous companies, and the NDCMB should collaborate more effectively. I look forward to sharing my experiences with universities, although sometimes there are barriers such as professors feeling threatened. Overcoming these barriers requires starting somewhere and building from there.

Are there ways we can improve the Nigerian Content Development Board (NCDMB) and Petroleum Technology Development Fund (PTDF) in this direction?
  The NCDMB and PTDF are moving in the right direction with their policies, but there is room for improvement. Recently, the president issued an Executive Order aimed at removing barriers, which is a positive step. In Nigeria, simple processes that should take a day often take a week, which hinders progress.
 
The students supported by PTDF are exceptionally talented and collaborate with reputable universities. Why aren’t we leveraging these university partnerships more effectively? PTDF should bring in experienced professionals to oversee training programmes. Many Nigerian students have been educated abroad and are eager to return home. We can establish training centres across Nigeria to harness their skills. These organisations must evolve more quickly. Technology is advancing rapidly, and we need to keep pace with these advancements.

What else can Africa improve on to increase competitiveness?
We must harness our potential and utilise our abundant resources. Africa should eliminate boundaries and enhance collaboration. There is much to learn from each other and ample opportunity to provide mutual support. If a neighbouring country excels in a particular field, we should offer our support. Promoting cross-border businesses will enhance competitiveness. It’s time for Africa to shift its focus from seeking solutions from the West to fostering internal collaboration.

What is your advice on the ongoing bid round in the country?
  The bid round should be concluded quickly. The 2022 bid round is still unresolved, and now we have the 2024 round approaching. The government should streamline the process to make it more efficient and appealing to investors. With other countries also vying for investments, Nigeria must act swiftly to maintain its competitiveness.

The post ‘Why we should be more worried about low oil exploration than production’ appeared first on Guardian Nigeria News.

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