It is cheaper to flare gas than to utilise it

Dec 11, 2004 01:00 AM

by Shaka Momodu

He worked for the Oando Group for 15 years. Alhaji Ibrahim Boyi joined the then Unipetrol as a senior staff after a four-year stint with Total Oil. In October last year, he was seconded to Gaslink as Managing Director after Oando acquired controlling stake in the fledging gas company. But barely a year in the saddle, Boyi is on the move again, this time no longer as an employee but as a core member of the strategic investors in Eterna Oil and Gas.
As the new managing director of Eterna Oil, he is charged with the responsibility of reviving a company whose fortune has been on a steady decline in the last 10 years. He admits the challenge is enormous but says "the faith I have is in my knowledge, my experience and also the experience of the team I am going to work with." We spoke to him in his office.

Question: Can you tell me why you are leaving Gaslink at a time like this?

Answer: Well, for me it is a personal decision. I have been in the Oando Group for the past 15 years and I think it has simply come to me to actually move on. The new place I am going is not much different from what I have done but it's just a newer challenge directly on me to be able to develop the organisation.
Eterna Oil and Gas is on the decline presently but I can also see a lot of opportunities and potentials to turn its fortunes around and that is really my drive. I am also part of a strategic group that is investing into Eterna Oil and it is a slightly different disposition from my being an employee here. I think for me that really is the challenge.

Question: In your one year tenure as the Managing Director of Gaslink, what would you say has been your achievements?

Answer: We have recorded some modest achievements within the last one year. And I am proud of that.
We are at the final stage of completing the laying of the Greater Lagos Pipeline, we are actually inside the Apapa Ports complex now. In terms of capital man hook up, we have grown consumers base by over 60/ 70 % since I came in from the number of 22,23 customers hook up on our network. In terms of the staff quality performance and the general process standard of the company, I believe that has gone up significantly.

The staff are more developed. They are more positioned to deliver better services to customers and ensure world standard operations of Gaslink activities. On that context, I think we have done fairly well, we have also pushed forward a lot of initiatives. We have advanced discussion very far into P & G development.
We have also positioned ourselves to attract new project areas. We are in the bid process for Ikorodu and some few other areas in Nigeria. I must say that we have made some good progress for the organisation.

Question: Looking at the gas sector, Nigeria still flares about 80 % of its gas. What do you plan doing in that regard?

Answer: In terms of promoting gas utilisation I think there are some fundamental issues that one must look at. One, gas is a huge capital intensive business. Our people say you're flaring gas, you're wasting it and it is a no value product but actually the cost of gathering gas, processing it and channelling it for utilisation is a quite an expensive venture.
Gaslink, for instance, just for the distribution network has spent over 4 bn naira to date. So you could imagine what it would cost to gather the pipeline from wherever the gas is being flared down to where you would use it. It is a huge infrastructural cost and that is why it is important for the government to continue to support gas development with some viable and workable fiscal incentives.

Incentives to the producers of this gas to gather it, incentives for the distributors of this gas to be able to construct the infrastructure and also incentives to the users of the gas because they have to spend money to be able apply it. Inevitably, I think the government still have a strategic role to play.
Gas is obviously the best alternative in terms of pricing and other value proposition. It's cheap, it's available, you don't have disruption and it's very clean.

Question: Why are we currently witnessing a dramatic rise in the pricing of gas in the country in spite of the fact that it is being procured locally and as such we don't have the landing cost argument like we have in case of PMS and diesel?

Answer: I would disagree with you that it is expensive, it is the cheapest and the best alternative against any other fuel you could use. This you can verify from the consumers. The domestic gas which is popularly called the LPG, LPG is actually a different kind of gas. It is still produced from the gas field through some form of extraction.
The problem with the cooking gas is due to the logistics, I know today in the country that the biggest storage of LPG tank you have is not more than four thousand tons and it is owned by NNPC. Now, to move gas from wherever you get it, the quantity you can lift and the quantity you can sell have such a huge gap. So it has been very difficult for the operators to be able to move the gas in an economic and commercial manner. So what you simply have is the scarcity of supply.
The price of gas is about N35,000 per ton which really is not very expensive, but when you look at the infrastructural limitations and the cost of moving it from wherever you get it, the amount of demurrage you spend and the little quantity that comes into the system would create a huge demand and supply gap which brings about the increase in pricing.

Question: How does your new position in Eterna Oil differ from your old one at Gaslink?

Answer: Gaslink is basically a natural gas distribution and marketing company, Eterna Oil and Gas is going to be a fully integrated downstream operator like Conoil, Oando etc. We would play in all areas but our focus would be mainly on very key products and special areas. We would play in most of the product lines but have very strong focus on identified three, four line of products.

Question: Are we likely to see Eterna Oil owing filling stations like Oando and Conoil?

Answer: Definitely, you would see Eterna Oil having its own outlets. You would see Eterna Oil with its own infrastructure, its storage. We already have a blending plant in Sagamu and we will definitely play very prominently roles in the Nigerian oil and gas markets.

Question: How come the company was in the background all this while despite the fact that it is quoted on the stock exchange?

Answer: What happened was that there were some management problems, the company was not properly structured to deal with some risk management issues. There were some strategic management issues, so there were some strategic mistakes on the part of the former management which we are set to change all that. Insha Allah we would inject a more competent management and expand the scope of the business of the company.

Question: What new challenges are you likely to face at Eterna that you have not faced before?

Answer: I can assure you very serious challenges with regard to the position of the company today as a virtually unknown organisation, and with very few infrastructure on the ground. We are starting from a very weak financial base, I think its going to be a significant challenge. I have no doubt that we can do it, people actually make the difference and people would be one of the core assets that we would be able to do it.
I have no doubt that it is going to be a very significant challenge, completely different from whatever I have done before. I am walking into an organisation with a very little structure on the ground. The faith I have is in my knowledge, my experience and also the experience of the team I am going to work with.

Question: What would you miss from leaving Oando and what are you taking away?

Answer: Oando has been a very fulfilling experience for me, I thank the Almighty for that. I came into this company as a Senior Staff, I joined in 1990. You should remember that I came in from Total, I had about four years experience in Total before I moved here. It's just history repeating itself now, because when I came into Unipetrol as it was then known, it was actually one of the lowest performing oil marketing firms in the country.
Moving to Unipetrol then was actually irrational, but I thank God we came in we made a little difference in whichever way that we have done it, we made our contributions and today I am happy to be part of an organisation that is ranking neck-to-neck with the company I worked with before, Total, that was the clear-leader. I have learnt so much exciting experience within that period and I think that is what is propelling me towards the new challenges. It is not a new experience as such. I have done it before and I would do it again and I pray that God would continue to support and drive me.

Question: What is the philosophy that drives you?

Answer: I think it is my intention that drives me. I am the kind of person that wants to do things for the greater interests of all. I consider the greater interest of others in taking my decisions. Iconsider what benefits the others. What benefit the larger community would gets. What benefit the stakeholders would move me and it has never been about me but about what is good for the stakeholders and the people.
My mindset has always been what my stakeholders would benefit. I strive to improve their lots. And I think that is what is driving me to Eterna Oil and Gas. A company that has been in existence for the last ten years, the performance has been declining, my interest is to go there and create a new value for the stakeholders. We are not going to compete with Oando but collaborate with them in areas to be identified.

Source: This Day
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