The Business Year

Iroghama Obuoforibo

NIGERIA - Energy & Mining

11 Marine Vessels Ready

Chief Operating Officer, Starzs Investments Company

Bio

Iroghama Obuoforibo is the Chief Operating Officer of Starzs Investments Company Limited where she manages the operations of a fleet of eleven ships working deep offshore Nigerian waters to support the oil exploration and production activities of international oil companies. She holds a bachelor’s in biology and psychology and an MSc in public health. She is an alumni of Harvard Business School and a member of the Institute of Directors. She is also the finance chairman of the Committee for Shipowners Association of Nigeria. A serial entrepreneur who sits on the board of a private security guard company, she is also the founder of the beauty brand, Hairven.

“No economy can thrive if the government is not working to provide an environment where people feel confident in their investment.“

What are your main services and what projects are you currently involved in?

Starzs Investments Company Limited is a maritime logistics company that provides vessel logistics services to international and Nigerian oil companies. We currently have a fleet of 11 marine vessels. Our primary focus and specialization is the provision and operation of ASD tug boats. These boats support the export operations of crude oil from the floating platforms in deep water offshore. During loading and offloading of crude oil from and into FPSOs, our tugs hold the tankers in place while they are being loaded with the crude oil. As long as Nigeria is exporting crude, our vessel fleet will be relevant. The vessels also do other support operations, including cargo supply runs, towing, firefighting watch, and other tasks. We are also a private maritime security company, so we have security boats. We have an MoU with the navy, which means we can put Navy personnel onboard our security boats. We have a sister company called Starzs Marine Engineering Limited, which is a ship repair yard based in Onne, Rivers State. It currently has the capacity to dry dock vessels up to 500 gross tonnage however it is being expanded to provide ship building and ship breaking yard with enhanced capacity to dry dock larger vessels of 7,500 gross tonnage and 89metres long. With the government beginning to ban the importation of vessels, this shipyard will be especially important. We will be able to tap into the new market that is going to emerge. The combination of owning vessels and a ship repair yard gives us an essential competitive advantage with our clients the IOCs and NOCs. They are sure that we have the maintenance support abilities in place, as well as the vessels. This also significantly reduces operational downtime for our assets.

Are you planning to expand your clientele to local companies?

We are exploring working with companies that drill deep offshore; however, a lot of these companies do not like to use long-term contracts, as the IOCs might. These terms are often for as short as 10 days within a given month. We are trying to see how we can expand our asset base in order to have assets available for more short-term, daily jobs. This would allow us to work with many different companies in a single month, while also having our assets available to be used for 85-90% of the month. We would prefer, however, to have long-term contracts in place, as this allows us to better prepare for our own long-term growth. It is tougher to invest or to get financing when contracts are so short.

As an indigenous company in a capital-intensive and foreign-dominated industry, how did you manage to establish your reputation?

Some of it is thanks to certain policy decisions, such as the Cabotage Act. This law gave us the confidence to go out there and seek opportunities. We knew that the playing field was equal, although not entirely favorably tilted in our direction. Additionally, back then, there were far more long-term contract awards. It is useful to have, for example, five-year contracts with the option for two-year extensions. These contracts allowed us to negotiate funding much easier, because financiers trusted that their capital would be protected by the contracts. Right now, long-term contracts are slow in coming and tender processes are drawn out, this is probably because there is so much uncertainty.

How did you fund your expansion, and what investments have you had to make?

We took advantage of opportunities arising after the passage of the Cabotage Act. We started with one vessel and we gradually built our asset base. We have grown the company organically, and that means we have borrowed with as little risk as possible by borrowing against contracts and not against prospect. By using this strategy, we have developed and maintained a healthy balance sheet. Much of the profits are reinvested back into the company. Our chairman is disciplined. That discipline is consistent throughout the company. The reputation that this focus has helped us develop has contributed significantly to our sustained success over the years. We are adding as much value as we possibly can to our clients. We have built a successful 9-year relationship with Total, and it is thanks to this focus on discipline. We have brought in a number of new assets in order to successfully meet demand from Total. Our partners at Total see us as an indigenous company in which they want to invest in and grow. Our commitment to quality service delivery and operational efficiency makes Total see us as a firm they want to support and partner with over the long term.

How do you see the dynamic between the international and local service companies developing?

With the introduction and evolution of Cabotage, this dynamic has been forced to change. We are now seeing more local companies coming into the industry and building capacity. They are entering partnerships and collaborating in order to achieve their goals. However, we still have yet to reach a balance. I do not believe that we should kick out all the international companies. We still need the competitive drive that international players bring to the market. We want the industry to be driven forward by everyone trying to be better. The NOCs are always looking at the IOCs to figure out what the other is doing so they can improve. We need a balance. Now, we are seeing more partnerships.

Considering the development of new oil and gas assets in other African nations, what needs to be done to maintain the attractiveness of the Nigeria’s resources?

The government has a role to play in enabling a healthy market. If the relevant structures, infrastructure, fiscal policy and other relevant policies, etc. are not in place then we will not see the right kind of growth that we have the potential for. We need to make doing business in Nigeria easier. If we do not, we are going to lose out. No economy can thrive if the government is not working to provide an environment where people feel confident in their investment. There is a larger role that the government can play in making the economy attractive to investors. Other African nations are already catching up. Other nations will use Nigeria as both a model for what to do and what not to do in managing their energy sectors. This means that they will be able to leap-frog past us, if we are not careful. The potential and the desire are there, but Nigeria needs to start developing projects and taking steps necessary for long-term success. We need to move away from plans and move into execution. We need to change our playbook in order to see development.

What is your outlook for 2020?

We are hoping to consolidate our current business. We want to consolidate our tug fleet. We now have a drilling rigs division that we have been working on, and we have a participated in a number of tenders so far. We have partnered with a reputable international drilling company called Foresight Offshore Drilling to offer services in this area. We hope to have a few projects ongoing by 2020. We are interested in strengthening our strategic alliances and partnerships to develop our technical and operational expertise. We want to improve all areas of our service delivery and take it to the next level.

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