Oilfield Services for Drilling Contractors in Ghana: Menergy Group

Interview with Roy Aboku, Business Development Manager of Menergy Group

What have been the major developments in Ghana’s oil and gas industry since 2013?

The oil and gas sector in Ghana has seen some significant changes over the last couple of years and perhaps a little beyond that, particularly with the local content legislation which seeks to create opportunities for local companies like ours. One of the major changes has been the clauses in the local content law that mandate that foreign companies coming to Ghana partner with local companies in order to promote knowledge transfer. Some of these changes have created significant opportunities for local companies like ours. I think beyond that, there has been significant development in the number of blocks that have been acquired and the preparations to develop some of those blocks. Thus in the past when there used to be just Tullow, now there is also ENI that has also come into the market. Hess is also making some advances. There are also smaller companies like Midea Resources and Camac which are all developing their interest in the blocks, making more stores, draining activities etc. So for a service company, whenever there is draining activity it creates opportunities for us. Nonetheless there have been some negative impacts as well, which largely have to do with the oil price changes on the global market. The effect of the price changes on the Ghanaian industry is that generally the industry becomes less attractive to the investors and the drilling activity slows down. Quite apart from that, even if the drilling activity continues, everyone is cutting down costs and asking you to reduce your day rates to help them reduce general overhead costs and that means sometimes when it comes to cutting down costs to save money, a lot of things are affected.

Those are the main changes that we have seen in the industry. Beyond that, I must commend the regulatory authorities in Ghana, as they have also developed very quickly in terms of their understanding of the industry and how they can possibly enforce some of the provisions in the local content law. There is always room for improvement but I believe that the fist of the regulatory authorities is becoming stronger and stronger in terms of enforcing these regulations to create value for the indigenous people of Ghana.

At some point in time, in the near future, we will be able to stand alone as a more technical service provider and compete internationally.

You mentioned that you now have greater opportunities to partner up with international companies, what will these potential partners find at Menergy? What do you provide?

As Menergy, we are an oil field service provider, and for the last 2 decades we have provided support services to drilling contractors. We provide labour and logistics; sometimes we provide marine offshore support. We have a sister company that provides offshore catering and husbandry. Basically these have been our core business areas.

We also have an interest in building capacity into other more technical areas. That has been our dream for some time now. The introduction of the legislation has helped us a lot because prior to it a foreign company coming in believing that they have all the technical knowhow to provide the particular service locally did not have to partner with anybody so they came to do what they know how to do best and left at the end of the contract. They would probably have given us some services to provide but that doesn’t give us the opportunity to build our capacity. Now with the legislation compelling them to have a certain minimum percentage of local equity, it creates the platform for these joint ventures, through which we believe that we will build our capacity to eventually establish ourselves as a company that could be a drilling contractor for example.

We are in talks with a number of companies that have expert interests in the industry, two of them are drilling contractors, and there is also a couple of others that work in other subsea technical activities. It is our belief that once we conclude these joint ventures, in whatever period that we are delivering the contract, the knowledge will be transferred from these foreign companies to us. At some point in time, in the near future, we will be able to stand alone as a more technical service provider and compete internationally.

Would you like to talk about the changes inside the group?

Menergy was founded over two decades ago; we started off in Gabon in 1989 so we have been around for a long time. It got to a point where we realised we needed to break some of the different segments into separate standalone companies so that they could function better and focus in their core business. One typical example is MEA Catering which used to be part of Menergy until we separated it off in 2008. We also have another subsidiary that is in property development, we have another that is in security and we have a couple of others. So in order to consolidate our business, we have decided to put them all under a group of companies and that is Menergy Group, which we are in the process of finalising all the paperwork for. Eventually, we will launch the Menergy Group with the other subsidiaries as part of it.

We have also tried to work on our expansion into new areas, of course being very careful because it is not a very high season for the oil business at the moment because of the international prices. However we have been working on opening an office in Dubai which will serve as our corporate headquarters. That office in Dubai will more or less be the go to place if you want to reach Menergy and do business with us in any of the locations in Africa. The idea is to bring ourselves closer to our clients particularly looking at the fact that a lot of oil companies are moving into Dubai and other areas.

What other areas are you looking into? You mentioned that oil is a sensitive and unstable industry and that you are relocating to Dubai.

The idea behind moving to Dubai was to get us closer to our clients and put us out there. As a business, we are always looking for opportunities to grow but we are also careful that we need to focus on our core business. We understand that the oil price situation is temporary, after a while we believe that the prices will stabilise again but the Dubai move is to get us closer to our clients. Because we are an African focused company we want to make sure that anywhere in Africa we can provide our services to our clients. Positioning ourselves with Dubai as our headquarters means that Dubai becomes a hub that links us to all our subsidiaries in Africa.

What is your personal vision for the company?

I joined this company 4 years ago and my vision has been to more or less maintain our place as the forerunner in the oil and gas industry in Ghana in the indigenous company category. It has been a very challenging period for us because as an industry there have been a lot of new entrants and that brings a lot of competition, but we have maintained our vision and focus to continue to deliver a very good quality service and to continue to maintain our position as the market leader here in Ghana. I must say that a lot of new entrants are coming in very strongly. We commend their efforts because healthy competition promotes good business.

Personally I think my vision is to move from the less technical services to more technical service provision in the long term. Our vision for the next ten years is to possibly be able to compete with multinationals like Schlumberger, Baker Hughes and the likes.