The document summarizes an interview with Stephen Jackson, Chief Operating Officer of Makon Group, a Nigerian engineering company. Jackson discusses the growth of fully integrated engineering, procurement, construction and installation (EPCI) companies in Nigeria. He notes that EPCI integration increases control and efficiency for companies. As local content grows, Nigerian engineering companies should expand beyond Nigeria to other African markets to diversify. When offshore deepwater projects increase, local companies must invest in new technologies but balance costs and opportunities to ensure sustainability. Oil price drops impact Nigeria after a lag, but prices will rebound and oil output must be maintained to support public and private sector activity.

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Stephen JACKSON
Chief Operating Officer
MAKON GROUP
DECK: Makon is a local engineering, procurement, installation, commissioning, operations and
maintenance company with nearly 20 years experience in the market. The company’s chief
operating officer, Stephen Jackson, talks with TOGY about the drivers of a growing engineering
segment, the move of key players abroad and prospects for deepwater offshore engineering in the
coming years.
BOX: Nigeria’s metering standards in 1997 relied on manual calculations for fiscalisation of
oil production. After receiving a request from Exxon Mobil to bring newer technology to
market, Makinde started a company with $650, enough to obtain the requisite certifications
to perform the job. Within five weeks, Makon had received a purchase order of $1.5
million, and 18 years later the group has grown to be a full EPICOM company with annual
turnover of over $700 million.
What have been the key drivers in the growth of fully integrated local engineering,
procurement and construction (EPC) companies in Nigeria?
Integrating along the EPC value chain increases scope and potential of activity for a company
while also granting it greater control. In being awarded an EPC contract, rather than one single
link of the value chain, project management and executing becomes much easier as companies no
longer depend on other contractors and their own project timelines.
There is also a cost savings element that cannot be ignored, particularly at a time when companies
are looking to obtain larger scopes of work with more lucrative contracts with efficiency gains
through economies of scale. The integration of these activities under one umbrella creates a
window of opportunity for partnerships and pooling of resources, or in other words, avoiding
redundancies.
As local content continues to grow in the engineering segment, what is the next phase of
development for Nigeria’s homegrown industry?
The coming to the fore of large EPC contractors has coincided with the emergence of new oil and
gas markets on the African continent. The last major step was the growth of these companies
from a single EPC contract operator to ones that could handle several contracts at the same time.
Leaning on accumulated experience and strength in human resource and technological capacity,
these EPC companies must begin to expand beyond Nigeria and develop global brands. Markets
such as Angola, Mozambique and Tanzania offer opportunities for pan-African EPC contractors
to expand exponentially and diversify their geographic portfolio, eliminating dependency on any
single market and insulating themselves from market-specific shocks.
How can local engineering companies positioning themselves for the industry’s move to
offshore deepwater plays approach this trend without over-exposing themselves?
As the movement of international oil companies towards offshore becomes more prominent, local
EPC contractors must remain agile enough to position themselves with the right track record and
services, but without jumping at every opportunity or overcommitting resources.
The engineering segment will see an increased focus on technology adoption for offshore, such as
virtual reality engineering where engineers can install a pump or a compressor from an office
whilst in training at work. These are necessary investments to compete in that space, but
sustainability is key in building a long-term business in this market, and it is critical for

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companies to find the right balance between cost management and staying relevant to market
opportunities.
The first fundamental point is to not be reactive to these trends, identifying them five years ahead
of time allows for a long enough lead time to gradually shift resources and company interests
without abandoning what sustains it.
One example of this is derived from the increased participation of local operators onshore. There
will be significant demand in maintenance services for pipelines and existing infrastructure for
engineering companies to service in taking over assets that have been producing for more than 20
years.
This remains an attractive medium term opportunity and a strong buffer for activity in the time
that it will take international oil companies to reach the development stage on key offshore
projects.
Howhave oil prices impacted activity levels in the engineering segment of Nigeria’s oil and
gas industry?
The recent drop in oil prices, which began in mid-2014, is not something new. It is a nine- to 10-
year cycle and is very normal and healthy in preventing market inflation. With that in mind we
know that it will affect Nigeria, but not in the same way that it affects other countries.
The economy in Nigeria is somewhat insulated, so there will be a lag in the oil price impact
affecting the market. By the time it does, prices will have rebounded to more than $70 per barrel
and stabilised somewhat. In the meantime, the country’s oil output will need to continue at least
at the same levels to ensure that both public sector revenues and private sector activity do not
experience shortfalls.