Mr. Abdul-Kadir Ahmed, Managing Director/Chief Executive Officer (MD/CEO), NLNG Ship Management Limited (NSML), which is the Maritime subsidiary of NLNG, is responsible for the technical management and manning of BGT’s fleet and NLNG’s marine terminal in Bonny Island. In this interview, he explained how the Russia/Ukraine war is affecting shipping in Nigeria and by extension globally.
How has the pandemic and now the Russian invasion impacted the global shipping business and the Nigerian maritime industry?
With countries still battling to recover from the pandemic, the economic impact could be very destructive, depending on the length of time the conflict would assume, coupled with the scope and the extent of the sanctions imposed.
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I give credit to seafarers for keeping the world alive throughout the pandemic. Ironically, not much is given to them. Over the last two years, the world would have been the worst place if seafarers did not show the resilience, dedication and professionalism to continue to work.
Even in a normal environment, working at sea is very difficult, but under the pandemic, it was 10 times more difficult. Crew changes were suspended, people were at sea for eight to 10 months without going back to their families; they couldn’t travel, they had to do things themselves that normally you would have gotten others to do for you in terms of maintenance, ship repairs and other things on board.
The seafarers for me, beyond the medical people, are the next ones that have really kept us kicking and bubbling through the COVID-19 and beyond. It is important that we continue to celebrate our own seafarers.
Looking at the Ukraine-Russia conflict, there are the actual and the potential effects of the war. The actual impact of the conflict is that a lot of seafarers come from Russia and Ukraine; we have some of them on our fleet.
One can best imagine the feelings of Ukrainian seafarers who are onboard our vessels or any other vessels and their families trapped in the conflict zone.
There are those who need to go home, but the replacement cannot travel to relieve them because of the war.
All of these have impacted significantly on operations and the movement of vessels, even around our coastal waters. We are beginning to see the impact in terms of the availability of seafarers.
A structural deficiency is already emerging within the industry as it has impacted negatively the availability of qualified seafarers.
If the Ukraine crisis goes on longer, we may not have qualified seafarers to man the vessels as there may not be any available.
The business is lonely enough that we have to work together. The Russia-Ukraine crisis is far away but it has impacted both crude supplies and the price of gas. The price of gas has multiplied 10 times in Europe; oil prices are above 100 and though an opportunity, in our own case, it is very costly because we import all our diesel needs.
For example, people didn’t realise until they read that Russia supplies over 40 per cent of the diesel to Europe and this is not getting there anymore. No wonder diesel price has gone up, and is not coming down anytime soon.
Apart from that, from our own and shipping point of view, it is really the human impact that we are feeling and we had to actually reach out to all our Ukrainian workers. We have had to engage them because it is not easy. Their families are at risk and they are on-board vessels.
It is expected that being on board, they are supposed to be 100 per cent alert. In our own case, we opened up for those who want to go home; we provided them with support to go home to join their families and for those who want to move their families out, we also provided support because this is our family.
Insecurity has been a major challenge to shipping in Nigeria such that the global shipping community sees the country as a hot spot. How has this been affecting the movement of products from your operating base to the market and globally?
The Deep Blue project of NIMASA has significantly done a lot; it’s a brilliant idea and its implementation has gone a long way in addressing insecurity. But we are not there yet. But at least it is a step in the right direction.
Insecurity and piracy are a major risk when it comes to shipping. The impact is two folds. The first is what you see, which is crews at risk, vessels high jacked, those physical things that happen when there is a piracy attack – people being killed, crews being kidnapped and cargoes lost, ransom payment and others.
Behind all of that are things that people don’t see, but it impacts the competitiveness of players operating in that environment.
In NSML, we have to deal first with the cost of insurance going up. Aside, we have to pay the crew’s high risks area allowance; we have to install all sorts of protective equipment on the vessels, and we have to have escort boats to escort the vessels in and out.
All of these cost money. You pay the insurance premium, which is very high, even double what is obtainable in other locations. People don’t see that but it does add significantly to the cost of shipping operations in these areas.
The risk for us is that if we are not competitive, then the business cannot be sustained because others are producing, selling and delivering LNG and we would love to be able to do that competitively. Unfortunately, depending on which part of the coin you are, the LNG industry has evolved into a competitive industry. People buy cargoes and are looking at the price – where they are going to get the best and cheapest price. The cargoes are the same and shipping adds to that.
The world is beginning to shift attention from crude to gas and other energy sources. Do you intend to increase your fleet as capacity grows?
We are an integrated maritime service company – technical ship management is one aspect of the business; we don’t own the vessels, we manage them.
As far as we are concerned, we want to expand the number of vessels in our management, not only LNG. We want to be able to offer that top-notch technical management of vessels that others would basically trust us to manage their vessels.
LNG is not just in Nigeria, we have Equatorial Guinea, Angola, Algeria, Mozambique and a number of countries developing LNG plants and they will need shipping. It doesn’t mean that those entities will own the vessels because the LNG business is also evolving, buyers are also investors because you either lift your cargoes on a Delivered Ex-Ship (DES) basis or Free On Board (FOB) basis; ultimately everybody needs shipping.
We are in a unique position, it doesn’t matter who owns the vessels, we are ready and available to be to manage their vessels and that is the aspiration, beyond just simply managing the vessels that NLNG owns and charters today.
NSML has the policy called ‘Nigerianisation’, where are you on that in terms of implementation?
That to us is very critical, we are a Nigerian company and for that reason, in line with our vision of supporting the growth and development of the Nigerian maritime sector, we cannot be a Nigerian company with a pool of seafarers that are predominantly foreign.
We took a particular decision of ensuring that we end up achieving, in the first instance, 100 per cent capacity to manage and run our vessels. However, because we are also international and the shipping business is international, you don’t want to over-localise yourself and we are within the context of our parent company’s business, which is international – providing cargoes internationally.
It is important we have cross-fertilisation of cultural mix, so we always have a mixture of crews from India, the Philippines, Ukraine, Russia and Croatia. The entire plan for Nigerianisation is to achieve 85 per cent by the end of 2022.
At the end of 2021, we were at 84.6 per cent; we know we will meet 85 per cent. When it comes to the ratings, a significant number are Nigerians, but we have a few people from the Philippines, but that is, again, from our cross-fertilisation and mixture of seafarers.
Are you considering owning a dockyard because it will be a big boost for the Nigerian economy?
Yes, it will be a big boost for Nigeria’s economy, a lot of foreign exchange savings, lots of capacity development, technical know-how, and a lot of investment.
The Dubai world dockyard employs over 40,000. It is possible, however, it is important to recognise it is an entire value chain and we would love to be part of every single value chain.