Dr Victor Ekpenyong, managing director of Kenyon International, has years of experience providing solutions to challenges in Nigeria’s oil and gas sector. In this interview with KINGSLEY JEREMIAH, he reviews the industry’s critical issues and strategies to sustain the sector for improved viability.
Nigeria is currently making efforts to increase its oil production. The government has set a target of 2.06 million barrels per day. While some progress has been made, many dormant wells remain untapped. How can Nigeria leverage the low-hanging fruits to meet its production target?
The Nigerian National Petroleum Company (NNPC) Limited is playing a key role in driving production growth. One of the major strategies being implemented is reactivating idle wells and acquiring underperforming assets from operators unable to maximise production. The government has taken significant steps by reclaiming certain assets and ensuring that they are put to productive use.
The reality is that Nigeria has significant oil and gas resources. Still, many of these have been left dormant for various reasons, ranging from underinvestment to operational inefficiencies. We are now seeing a renewed focus on revamping production through partnerships, technology, and better regulatory oversight. Nigeria will meet and potentially surpass its 2 million barrels per day target if we can consistently apply these strategies.
Security has always been a major concern, particularly regarding oil theft and pipeline vandalism. Have there been any improvements in this area?
We have seen significant improvements, thanks to enhanced security measures. The Office of the National Security Adviser and the NNPCL have deployed security forces across oil-producing areas to curb theft and pipeline vandalism. The results have been impressive. Many previously inaccessible pipelines have been reopened, allowing for increased crude oil flow.
This proactive approach has boosted production and ensured that revenue losses due to oil theft are minimised. The Trans-Niger pipeline, for instance, is a critical asset, and its security is paramount to sustaining production levels. Thanks to these interventions, we are already seeing better output figures.
Despite these gains, evacuation remains a major challenge for many operators. Do you think this will remain an issue as we ramp up production?
Evacuation is indeed a key challenge, but innovative solutions are being implemented. Waiting for all pipeline infrastructure to be repaired before increasing production is not a viable option. Instead, we have seen the widespread adoption of the barging system, where crude oil is transported via barges from flow stations to export terminals. This game-changer has ensured that production continues even while major pipelines are being repaired.
Many operators now have dedicated barging teams at their flow stations. Once the crude is processed, it is transported via barges, significantly reducing reliance on pipelines. While this method is more expensive than pipeline transportation, it ensures that production does not stall. In the long run, once pipelines are fully restored, costs will come down, but barging is a necessary solution for now.
The Federal Inland Revenue Service (FIRS) has estimated that the cost of producing oil in Nigeria is around $40 per barrel. How can we bring this down?
Cost reduction is critical, but the priority should be maintaining production while implementing cost-saving measures. Even with a production cost of $40 per barrel, if oil sells at $70 per barrel, there is still a profit margin. However, it is essential to lower costs to remain competitive globally.
One way to achieve this is through technology and operational efficiency. For instance, advanced drilling techniques, automation, and digital monitoring can optimise production processes and reduce wastage. Another approach is localising oilfield services, historically, Nigeria has relied on expensive foreign services, but today, we are seeing a push to develop indigenous capacity, which can significantly reduce costs.
Ultimately, Nigeria must balance increasing production and ensuring cost efficiency. We cannot afford to leave our resources untapped while waiting for perfect cost conditions.
Indigenous oil companies have taken over many assets from the international oil companies (IOCs). Given the current challenges in the sector, how would the new owners survive?
The same way the IOCs thrived in Nigeria is how indigenous companies will succeed. They must apply best practices in asset management, production efficiency, and community relations. The key to success lies in understanding their acquired assets and deploying the right strategies to optimise production.
We have already seen examples of indigenous companies excelling. For instance, operators such as Seplat and Aiteo have significantly increased production on assets acquired from IOCs. These companies have demonstrated that Nigerian firms can successfully operate these assets with the right investment and management.
You are from the Niger Delta, an area that has suffered from oil pollution and community unrest. Many fear that indigenous companies may struggle with environmental and social challenges. How should they handle these issues?
Community engagement is critical. There needs to be a tripartite approach involving the host communities, operators, and regulators. The Petroleum Industry Act (PIA) has already created a framework to ensure host communities benefit from oil production. Indigenous companies must build strong community relationships by investing in education, healthcare, and local employment.
Regulators must also enforce environmental compliance to ensure that operators uphold high standards. Unlike in the past, when communities were neglected, the new approach should include inclusion and mutual benefit. When communities are involved, the risk of unrest and vandalism decreases.
Could you discuss your role and how your expertise has helped to solve major problems?
Our company has been at the forefront of tackling critical challenges in the industry, leveraging our technical expertise to restore and optimise production. We are one of Nigeria’s most prolific service providers, and our work ensures that many oil assets that would otherwise remain dormant are brought back into operation.
In the past, Nigeria relied heavily on foreign expertise for good intervention and asset management, leading to massive capital flight. Companies would hire foreign specialists, fly them in, and pay exorbitant fees. However, we have changed that narrative by building local capacity and retaining these services within Nigeria. This has significantly reduced costs and allowed us to keep more revenue within the country.
Our work has been crucial in boosting Nigeria’s oil and gas output. Many wells that had been abandoned for years are now producing thousands of barrels of oil and millions of cubic feet of gas daily. This directly contributes to national production and revenue generation.
Without our interventions, these wells would have remained inactive, resulting in lost investment and opportunities for Nigeria. In many cases, international service providers would have charged huge sums to reactivate these wells. By handling this domestically, we are saving the country money and ensuring long-term sustainability in the sector.
We have the technical capabilities to step in and manage these assets efficiently. Additionally, we have strong partnerships with global firms that provide advanced technology and support, enabling us to operate at international standards. This means we are well-positioned to take advantage of the evolving landscape in Nigeria’s oil and gas industry.
We are engaged in constructing gas pipelines and deploying advanced technology to ensure safer and more cost-effective transportation of gas.
We recently partnered with a U.S.-based company to introduce a cutting-edge pipeline technology that enhances security and durability. This technology addresses Nigeria’s pipeline challenges, mainly vandalism and leakage.
This is a revolutionary technology that has never been deployed in Nigeria before. The pipeline is coated with a special material that makes it extremely difficult to tamper. Unlike conventional pipelines that can be cut easily, this new technology requires specialised machinery for access, making it highly resistant to vandalism.
Additionally, the coating protects against corrosion and ensures long-term durability, reducing maintenance costs significantly. This will help Nigeria save money while improving the reliability of its evacuation infrastructure.
This innovation will be a game-changer. It will enhance production efficiency by ensuring that crude oil and gas can be transported safely without frequent disruptions. Reducing vandalism-related losses alone will be a major boost for the industry.
Moreover, by adopting this technology, Nigeria will cut operational costs, which will lower production expenses and increase profitability. This will also positively impact government revenue, as more oil and gas can be exported without interruptions.
We see tremendous growth opportunities for our company and Nigeria’s oil and gas sector. As divestments continue and indigenous firms take on larger roles, we are committed to expanding our services and bringing in more advanced technology to enhance operations.
We also have strong backing from international partners supporting us with the latest industry innovations. With these collaborations, we can drive Nigeria’s production to new heights while ensuring sustainability and cost efficiency.
Africa aggressively pushes for oil exploration, even as global discussions around renewable energy intensify.
What role do Nigerian service companies play in supporting oil development across the continent?
Nigeria is leading in oil and gas expertise across Africa. We have built strong local capacity in drilling, well intervention, asset management, and refining areas. Nigerian companies now export these services to Uganda, Tanzania, and Angola.
While the West advocates for an energy transition, many African nations still rely on fossil fuels for economic growth. It is impractical for Africa to abandon its oil and gas resources when developed nations maintain their fossil fuel reserves. Our role is to support African countries in developing their oil resources responsibly, ensuring that they maximise revenue for national development.
You mentioned the need for investment rather than loans. Can you elaborate on that?
African countries must prioritise investment partnerships over debt financing. Nigeria, for instance, is championing the creation of an Energy Bank for Africa, which will provide funding for oil and gas projects across the continent. This will reduce reliance on Western financial institutions, which are increasingly hesitant to fund fossil fuel projects.
By securing investment rather than loans, African countries can retain greater control over their resources while building sustainable energy infrastructure.
