A Paradigm Shift in South Sudan
AOP talked to Babatunde O. Odeyemi, General Manager of Nile Delta Petroleum Company Limited, about the differences in doing business in a mature market like Nigeria, versus a developing market like South Sudan.
Niger Delta E&P, an independent oil company based in Nigeria, entered South Sudan in 2015 through a joint venture with national oil company Nilepet. The local entity, Nile Delta Petroleum Company, is focused on development of brownfield sites and gas utlization, bringing techniques and experience from its integrated operations in the Niger Delta region to South Sudan’s oil patch.
How does operating in South Sudan compare to operating in Nigeria?
The opportunities in South Sudan are different. It is not necessarily that they are better, but Nigeria is a very saturated market with local expertise while South Sudan can be regarded as being at the nascent stage, especially for indigenous companies like ours. The competition in Nigeria is more developed, and Nigeria’s strong local content policies have creating a thriving domestic market.
In South Sudan, there are very few local companies involved in the oil and gas sector, especially upstream, and that is what we are trying to change. We are taking what we have learned in Nigeria, and hoping to improve on our operations here. For example, we had a 1,000 barrels per day refinery in Nigeria and we are in the process of expanding that to an 11,000-barrels-per-day capacity facility. We intend to do the same here by building a modular refinery and expand over time as there exists no functioning refinery in the country. We have already trained 4 NilePet staff at our facilities in Nigeria and a new batch of 4 were deployed to Nigeria in August.
We are also trying to create a paradigm shift in how the international companies here view the local companies, and the things that local companies can do. We are working to increase local competencies, and 95 percent of our staff are South Sudanese. In Nigeria, we have a partnership with Baker Hughes and we have signed an agreement with them for South Sudan as well. With this arrangement, our staff can be trained by Baker Hughes, an internationally-recognized name in the oil and gas industry. These are the things we are trying to change.
What is the perception of local companies to the international players in South Sudan?
We are a local company, and we are very grateful for this, but we had a lot of pushback when we started, with people saying, ‘Local companies cannot do this, they cannot keep up.’ Local companies are given opportunities for simple services, but not complicated projects like what we are doing now. The opinion was that local companies could not complete these contracts, such as servicing downhole pumps and supporting workover operations.
This is one reason it was important for us to align with a company like Baker Hughes, which is quite respected, and we know that our staff can handle these projects. Since we have been here, we have been able to show a marked difference from the past precedent — we have introduced things like HSE policies that our staff abide by and have been able to pass same on to other contractors. We are showing that local companies can operate successfully and safely, and hopefully this will open doors for local companies that come after us.
What are the challenges you face operating in South Sudan?
A huge challenge has been the public perception of South Sudan. The first thing you hear about South Sudan when you’re outside the country is always about security. In certain instances when we have tried to engage other parties to deliver services, the first that comes up is, “Oh, South Sudan has that security issue so we are not interested.” We get a lot of pushback on how people see South Sudan versus the actual situation on ground — that is a major hurdle.
How would you describe security situation in South Sudan?
Skirmishes in parts of the country have been reported, and no doubt, this has impacted operations in certain areas. For example, of the three operating companies in the upstream sector, only one company, Dar Petroleum, has been able to stay in operation. The others have not been operating, for many reasons, but security is one of them.
So, security is an issue, but I just returned from the field to see my team and I was perfectly safe. Nothing happened to me. I drive around Juba all day, and it is also safe. As with any country, you must take the pluses with the minuses. Security is also something the government is working on, and they are getting support from the region and the international community at large to end the conflict.
That said “security” is not stopping business from moving forward. To improve the economy and provide jobs for jobs for people one must move forward, and work around these issues.
Why is it important for South Sudan to monetize gas? How can this resource benefit the country?
When I initially moved here in 2015, the country was flaring 5 million cubic feet of gas per day. Right now, it is close 15 million cubic feet of gas per day. Apart from being a pollutant to the environment, this gas could also be utilized for everything from power generation to LPG. That is money being wasted. What we have done is come up with the first comprehensive sample and analysis of gas in South Sudan, and are currently working with the Ministry of Petroleum to find the most optimal strategy for utilizing and monetizing gas.
What would you tell investors interested in investing in South Sudan?
The good thing about South Sudan is the potential is huge. Nigeria, as I already said, is a saturated market, but here that is not the case. Especially coming from the local angle, there are some great opportunities to be developed with local partners. One of the exciting things about my being here has been the opportunity to start the business from scratch and see it blossom. An example is the refinery we have planned. The country imports all its refined petroleum products, so imagine what a refinery will do for the country, in terms of foreign exchange savings, exposure, etc. For potential investors, yes you hear news about what has happened and the conflict, but there are also opportunities to make an active change — to have a social and economic impact — while also generating revenue for their shareholders.