Nigerian oil producers are positioning themselves to acquire lucrative oil leases ahead of the planned $12 billion asset divestments by international oil companies (IOCs) in 18 months.
Since 2010, three IOCs, Shell, Chevron, ConocoPhillips, have divested 24 Oil Mining Leases (OMLs) worth $10.78 billion. These were acquired by 13 indigenous exploration and production companies with loans from consortiums of local banks.
Many of these assets have run into murky waters due to low oil prices, over-valuation, lack of technical and financial competence to operate them, and over-politicisation of the process.
In view of this, Aspen Energy Limited, an integrated energy company, and other stakeholders in the sector, organised a roundtable on July 11 2017, on strategies to grow Nigerian independents to World Class E&P companies and take advantage of future divestments.
Austin Avuru, CEO of Seplat Production Development Company, who gave the keynote address, charged operators to deliberately set out to build capacity in a manner that can transform their companies to world class companies with structures, procedures and processes.
Avuru listed good corporate governance structure, diversified portfolio with multiple sources of income and varying risk profile, and sustainably growing production and reserves as factors that will make local producers competitive.
“At Seplat we created a board that can remove the CEO if in their opinion the CEO should not be in office,” Avuru said “If you have a board that can remove the CEO or Chairman when in their opinion they are not fit to be in office, then you have a board.”
Avuru noted that when a firm has a board that is only symbolic and is answerable to the CEO and the chairman’s wife, it will not grow.
According to the Seplat boss, other factors that should be considered by independent producers to position themselves for future divestments include operational excellence, well-balanced and competent workforce, and the best health safety and environment practices.
“You will have to get away from hiring your nephew and nieces and friends and children of friends; a competent workforce is the heart of a company, you really have to deliberately go out to look for the best in your field.”
In his remarks on the lessons learnt from the recent divestment, Lai Fatona, managing director of ND Western said that acquisition of the assets by indigenous operator was a catalyst for the Nigerian oil and gas industry to grow itself.
Fatona lamented the fact that Nigeria has not benefited from backward re-investment of over $10billion made from divestments made in the last 7 years indicating the need to reform Nigeria’s fiscal regimes.
ISAAC ANYAOGU
