There has been unrest in the Oil Mining Lease (OML) 30, Nigeria’s second largest onshore oil & gas asset, situated in the Niger Delta, in the last few weeks.
Ongoing Community protest has been focused around the quiet success story of a relatively unknown Nigerian company, Salvic Petroleum Resources Limited (SALVIC).
Investigations reveal that in the last one year since March 2017, SALVIC had been acting as 3rd party operator of the OML30 on behalf the name-plate operator, Heritage Energy Operational Services Ltd (HEOSL). SALVIC achieved obvious successes in the one year it took charge of the asset, benefitting all stakeholders, thus the communities are expressing anger at the abrupt move to replace SALVIC with foreign operators who do not understand the local environment nor the requisite stakeholder management.
OML30 is 35km to the east of Warri, covering 1,095sqkm, comprising 11 fields, 9 flow stations, the Ughelli tank farm (UPS), plus the Trans Forcados Pipeline (TFP), and with reserves estimated at about 1 billion barrels of oil. It is a critical source of oil revenues for the Federal Government, the Delta State, 110 host communities and other oil & gas producers around the region that depend on the major evacuation trunk line, the Trans Forcados Pipeline.
In the last one year, SALVIC delivered some impressive results in OML30, taking production from zero to 75,000 barrels per day (bpd), bringing back the Forcados Pipeline which had been down for 15months prior and sustaining an uptime of over 85 percent during the 12 months of operations between March 2017 and April 2018. In addition, the company restored good relationships with the Communities and recorded no major security or environmental issue during the same period.
The host communities therefore are unhappy with the move to terminate SALVIC.
SALVIC is a new exploration & production (E&P) company in Nigeria’s oil and gas industry. Scant company information indicates that SALVIC has strategically differentiated itself as an E&P company with a service orientation, focused on providing the full range of value chain E&P services as a non-equity holder 3rd party operator. SALVIC’s strengths lie in execution excellence, cost control, operational efficiencies and optimising existing infrastructure to extract value even from challenging and mature assets.
In March 2017, OML30 was an ideal opportunity for SALVIC to prove its new approach and capabilities. Between March 2017 and April 2018, under a Technical Services Agreement (TSA) with the name-plate Operator of OML30, Heritage Energy Operational Services Limited, SALVIC embarked on handling all aspects of operations and crude oil production in OML30, including technical support services, security, operation & maintenance, community relations & other stakeholder management, CSR and management of the 87km Trans Forcados Pipeline (TFP).
SALVIC was given steep production targets in OML30 with a penalty of $25million if the targets were missed. Considering that the asset had been on Zero production for 15 months prior and the Forcados Pipeline had been down throughout the 15 months, it was an enormous challenge for any operator let alone a young new company in a complex business arrangement.
Undaunted, SALVIC took on the challenge of turning around the fortunes of OML30; by June the company had rehabilitated the Forcados Pipeline and by December 2017 had ramped up crude oil production from Zero to 75,000bpd, a feat that drew commendations from industry experts and the Communities, as well as the Federal Government and the Delta State government.
According to company sources, SALVIC achieved the production ramp up without drilling any new wells. It was all from a robust work programme of creative and innovative solutions to optimise production and unlock value from existing legacy infrastructure and old equipment.
The exponential increase in production would not have been possible without the gargantuan task of repairing the 87km Forcados Pipeline which had been debilitated throughout 2016 from incessant vandalism and bombings. SALVIC restored the pipeline in record time of 3 months and then maintained uptime of over 85% throughout the year.
These successes were instrumental in improving revenue generation for the Federal Government, the Delta State, all injectors into the Forcados Pipeline and other asset owners in the western Niger Delta. The sustained uptime on the trunk line also enhanced gas production into the domestic market for power generation by the continuous support of OML34 condensate evacuation.
One other evident success that SALVIC achieved in OML30 on behalf of Heritage and the JV Partners was the peaceful community relations and stakeholder management. Unemployment and the casualisation of labour was a big community issue, and SALVIC changed the practice of treating community workers as cash-based casual labour by converting them to full time permanent employees with full benefits. Furthermore, the operator had no major health, safety, security & environment (HSSE) incident. In February 2018, the company achieved a total of over 1.1 million loss time injury–free man-hours, which is a rare feat in view of the size of the OML30 asset and the operations.
“The SALVIC and OML30 success story is one of defying all the odds”, said one industry observer. “By their achievements in OML30, the SALVIC Team has gained a name as Turn-Around experts in handling and extracting value from challenging and complex assets.
“They met and exceeded targets that were near impossible and demonstrated that excellence does not depend necessarily on the age of a company but the resilience of innovative, intelligent people who are empowered and focused on results.”
The SALVIC-OML30 project was led by Ikemefuna Okafor, CEO of Salvic and backed by an impressive team that includes, but not limited to, the following: Ebenezer Ajayi, ED, Operations, Theophilus Ekiyor-Katimi, OML30 Asset Manager; Gabriel Oramasionwu CEO, Abbeycourt; Celine Loader Director, Corporate Affairs (incl. Government & Community Relations); Fufeyin Funkakpo, Manager, Government & Community Relations; Uchechi Nwankwo, GM, HSSE; Okey Ekeocha, Manager, Security; Maxwell Okoh, MD, Eraskorp
