Oil Crash Boosting Nigeria’s Local Services Industry, Ladol Says

  • Nigeria too costly for IOCs not to use local hubs: Jadesimi
  • Ladol will consider listing as it seeks to invest $500 million

The crash in oil prices is forcing offshore producers in Nigeria to turn to local service providers to save costs, according to the head of Ladol, one the West African nation’s largest logistics hubs for the industry.

Ladol, which owns an industrial free zone and shipyard opposite the main port in Lagos, Nigeria’s biggest city, has seen more interest from international oil companies that have traditionally opted to repair rigs and vessels in places as far away as Singapore, according to Amy Jadesimi, its chief executive officer. It is already used as the main hub for Yinka Folawiyo Petroleum Co. Ltd., a Nigerian company that operates the Aje field off Lagos’s coast, she said.

“There’s no way IOCs can afford to do business in Nigeria unless they get their offshore support from Lagos,” Jadesimi, a 41-year-old Stanford graduate who used to work as a mergers and acquisitions banker at Goldman Sachs Group Inc., said in an interview in New York on Sept. 21. “Return on investment in Nigeria is half what it is in Brazil, half what it is in the North Sea. That’s because the cost is too high. What will unlock more investment is producers lowering their cost of doing business.”

Oil Investment

Nigeria’s government is trying to boost investment in its oil industry, including its offshore fields, which have largely been immune to the militant attacks on land-based export terminals and pipelines that cut overall production to a near-three decade low of 1.4 million barrels a day in August. Deep-water fields first began operations about 15 years ago and now account for more than half the country’s output.

Ladol is in talks with several operators in Nigeria and Tullow Oil Plc, which runs Ghana’s Jubilee field, Jadesimi said.

“One IOC in Nigeria recently met with us and they’ve started the process of moving to Ladol,” she said. “They’re going to save $2 billion in the next three years. We’re already talking to the Ghanaians, as Nigeria’s just next door to Ghana, so it would make the whole supply chain for them cheaper.”

Jadesimi’s family owns about 80 percent of Ladol and has pumped $500 million into the business in the past decade, including money from loans and a sale of a 20 percent stake to investors in Nigeria, she said. It plans to invest the same amount in the next five years.

“We are looking at raising capital internationally, both debt and equity,” she said. “We’d definitely consider a listing.”

The company wants to build more infrastructure so that it can improve its logistics facilities and ship-building capacity. It is the only base in West Africa that can construct and repair floating oil rigs known as FPSOs, which are common in Nigeria and Ghana, according to Jadesimi. Early next year, it will finish construction of an FPSO owned by Total SA and which will be used to pump oil from Ejina, a field with a depth of 1.5 kilometers (0.9 miles) that the French company says will be able to produce 200,000 barrels a day by 2018.

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