Oil and Gas Sector in Ghana: Schlumberger and the Oil Industry

Christian Ibeagha gives an overview of the oil sector in Ghana and presents Schlumberger, which has been operating in the country for more than 2 years now. He also discusses challenges and competition, and shares his vision for the future of the country and the company.

Interview with Christian Ibeagha, Oilfield Service Manager Ghana, Ivory Coast and the Remotes (GIR) at Schlumberger

Christian Ibeagha

At Schlumberger Ghana, what came first? Recruitment positions?

Two years ago we made the decision that Ghana was the place for our company. It was driven by regional stability, certain facilities, and the ability to have a free zone, but also by the ambition of the Ministry of Energy, the Petroleum Commission and the National Petroleum Company setting up and giving us the opportunity to prove what we can do as a company to help develop the local industry.

It is the biggest problem we have because local content is good business as well. If you can have local people, then you have certain advantages that come with that. As a local person working in Nigeria, I could do things that an expatriate could not do because I was Nigerian. So in that sense it is good business for us and we have a target for this. The target that Ghana set is not at all important, to us because the problem is finding the people.

How do you deal with this?

What we are doing is building a relationship with the universities and the higher institutions of learning where we help them develop some of the required talents. Year-to-date, for example, we have donated more than two million dollars to the universities to help to train and develop some of the competencies that we are looking for.

The other thing we have done is to set up a succession plan. The succession plan simply means that we find the Ghanaians and we accelerate their learning by sending them outside of Ghana where they go and develop managerial skills. Eventually they come back to do what we expect them to do.

Those are just two of the things that we do. If you start going to the grassroots, we also sponsor primary schools and secondary schools. We have adopted these schools and we are working with them. Today, as we speak, we do have a program through which students come and go to school and at the end of college, if they want to work with us, wonderful; if they don’t want to work with us, it’s great corporate social responsibility and they are free to go anywhere. So that’s typically what we are doing to deal with this particular problem.

Can you give us an overview of the oil sector, the outlook for this year, and the company?

Schlumberger came to Ghana in 2008, at the start of the exploration work, and it has been a very wonderful experience to see how that has transitioned from early exploration to massive oil production in less than 36 months. This is the first time that has happened in the world. Having said that, when you accelerate like that, there are obviously certain issues that come with it. The number of wells started to slowly creep up but the people to meet that demand were not there. You have to accelerate and bring things and mobilize it for all over the world which was a significant challenge. But here we are three or four years down the road from the discoveries. I think that the government has made a significant effort to provide the necessary facilities for the industry to grow. We do have support from the government, the Ghana National Petroleum Company, the Petroleum Commission, and the Ministry. They are all working together towards making the industry a very mature one.

Regarding the prospects, we have today easily three or four sanctioned development projects. I think the future is very bright. Having said that, we are going through a year where it is a little slow in Ghana. It’s only slow because we just came through an election period. People wanted to hold on to understand the transition and what was going to happen. Now it is clear; there is a government and an administration in place. We will play catch-up with the programs that got delayed. So it’s looking like a very slow first and second quarter, but in the third quarter we believe we’ll get back on track. We have many plans for 2014 and 2015. We will definitely be very busy here especially with the targets that have been set.

Do you think that for the moment mining is what brings revenue to your country or has it yet done that? When do you think that things will be reversed?

It’s not obvious. I don’t know if we can talk about how the petroleum resources and the allocation happens but I am aware that the government has a formula for how they share it and all that. I am not very aware of how much they get and how it is disbursed, but I believe that as we make progress, the initial target of our government was to be at half a million barrels per day by 2015. That is going to be very significant. I think it may not be visible right now, but in a couple of years that should be absolutely transparent and visible to the people.

So you are confident in the development of the country in the future? It may be slowing down now but you feel it will come back.

The targets are there and everything has been done towards achieving these targets. The development projects are already sanctioned and the pipelines are there so it is all looking towards achieving the goals.

Achieving your goals is the difficult part, not because you don’t have the technology but because of the human resources aspect. Everything is going so fast here in Ghana that you have to catch up and recruit and train the right people. What is your policy regarding this and what have you done for Ghana? How do you work with the government and education ministry?

As a company, Schlumberger believes in operating locally where they work. It is not uncommon for us to have a target of 80% local content and we do that. It is 80% because they want to keep 20% to continue to drive the values of the company. You can imagine that Nigeria, for example, could sustain itself 100% but it’s not done simply because we don’t want Schlumberger operating in Nigeria to be a Nigerian company. It’s a conscious decision to keep 20% non-local.

Here, however, there is the challenge that we are operating in deep water. It is significantly expensive. We have to keep a certain very high level of service quality and service delivery, with very high efficiencies to make the projects viable. Therefore, we make our best effort. We set up our project-readiness assessment. We look at what we need and unfortunately at the very early stages of this project, we have had high costs to operate because we have to bring the people from outside.

Having said that, we have made significant investments. We work with the universities of science and technology. We are working with the University of Ghana to develop the talents that we want and we do this in the form of sponsorships. We help educate them, train them, assist in fairs, and donate software. We have made software donations to both institutions of two million dollars. We keep working with them and looking at the talents we want to engage.

The other thing that we have done is to work on the succession plan. The only way that we can develop these talents sometimes is to recruit them and then send them overseas to truly become full-time managers.

Are these individuals already working?

We do both. Some of them are fresh graduates, some are still students. We go out and identify what we want and we get them in to work with us. That is mostly how we plan to achieve this. On the national content of the local content side, you have the institutions, the Ghana National Petroleum Company, and the Petroleum Commission. We also work with them and we help them develop the competencies that they require. Some of these we do on several fronts, such as open-ended education assistance and the opportunity to embed their people in our operation. So if the Petroleum Commission recruits people and they want to make them top geologists we give them the opportunity to join Schlumberger and we send them somewhere where they can go and develop the talents that they have. They can be with us for two years and after two years they come back to join their corporation. But they have learned everything about the Schlumberger way in which we work. They have all the ethics and high delivery standards which benefits them back in their company. So we are working on several fronts on this.

At the end of the day, how well does this work?

So far the succession plan is working. Like I said, we are behind on our recruitment of certain talents, especially the professionals in Ghana. For example, if we want geologists or geophysicists, we go look for these people. Regarding the fresh graduates that we recruit and send to school to become engineers and field engineers, we can handle those.

Are there other major challenges for you as a company?

As I said before, we picked Ghana; we came here in 2008 and we made a business decision that Ghana will be the hub for the sub-region. Schlumberger is putting in a 50 million dollar infrastructure in Ghana to support the sub-region. It is and was difficult for us to support our operations outside of Ghana from Ghana, especially when the operators don’t have operations within Ghana. When we have Chevron operating in Liberia and we cannot operate out of Liberia and we choose to operate from Ghana, it is complicated. But fortunately we do own a private free zone which is solely because Ghana has such facilities and such maturity to support that. We have set one up and it is today easy for us to operate. So yes when we started we had lots of issues covering the region, but we have found some facilities provided by the Ghana government and that is truly helping us to catch up with such challenges.

Compared to the region, what are the advantages of being in Ghana? Are you happy with your decision to come to Ghana?

Two years ago we made the conscious decision that Ghana was the place for our company. It was driven by regional stability, certain facilities, and the ability to have a free zone for example. It was also driven by the ambition of the Ministry of Energy, the Petroleum Commission and then the National Petroleum Company setting up and giving us the opportunity to prove what we can do as a company to help develop the local industry. All of that was important. Have we regretted it? Absolutely not. It’s actually getting better. With the number of development projects sanctioned, I believe that we will mature very fast. We will be self-sustainable within Ghana and therefore the added benefit of all of that investment in the new location for example, is just going to help us set up and work in the satellite locations.

What is your vision for the future of the development in the country and the company? What is your five year goal?

As a company, we just came off of 20-20 vision of the development plan for the company. It is very obvious that deep water is going to continue to play a big role in the development phase. It is clear that technology will be needed to meet some of the challenges. We also understand that we have to do business in a whole different way. For example, when I look at the West African business that I look after, we cannot afford to have a big footprint in every country. Therefore, the region in Ghana gives us the opportunity to manifest what the company actually plans to do. So it’s a key place to be in terms of having the challenges that the company is facing, in terms of utilization of assets, how we deploy the assets, how much return we get, and how we manage people effectively across the line. The challenge for the company is very much represented here so we are going to be a pilot location to see how we execute this transition for the company as much as the other chosen locations as well. It’s an exciting place to be. It’s exciting times to see how we transition and manage this for the benefit of the bigger company globally.

What about your competition?

We do have competition here. We have Halliburton, Baker, Weatherford, and others. However, we have the advantage of our commitment to this location. We are the ones coming here in three years and putting up a 50 million dollar investment. We are pushing to get the free zone. We are leading in helping to develop the local infrastructure and capacity building. I think that the commitment and the footprint we have in the sub-region is key. We’ve been in Ivory Coast for 30 years and we’ve been in Nigeria for more than 50 years.

Are your competitors not seeing the potential of the country?

It’s not about the potential but it’s not easy to come in and take a risk and set up a business in a place where you don’t know what will happen. Sometimes you do that and sometimes you wait and see. Everybody’s here and working towards it, but again, once you have the footprint and the processes and technology, I think service quality becomes a known for you to deliver. Like I said, in deep water operations where the costs are enormous, I think the first thing you look for is who is around, who has the tools, who has the backup equipment, and who has the people to make those differences. I think that’s who we are and that’s what we do; that’s why in certain places we get direct awards because the customer understands there is no need to tender for the work.

We will go and justify why these people need to do it because they own for example the logistics in the sub-region. That’s why we have a vessel that supports us. If I have to send things to Mauritania and I have one vessel a month to catch, if I miss that vessel then I have to do something different. We do have a vessel that we can deploy to help us do that. It’s not obvious to everybody that that’s the way to set up, but we can do that because some of these costs can be shared with the other businesses that we have along the west coast. Whereas if you have just one location in Guinea or Gambia or Sierra Leone, then the costs become prohibitive and you cannot truly do what you have to do. I think that’s the strength of our footprint and our delivery. We continue to believe and grow.

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