To what extent is the recent ConocoPhillips acquisition inciting more asset sales to indigenous firms?
ADEWALE TINUBU: International oil companies (IOCs) are divesting even more onshore assets within Africa due to a strategic refocus on offshore exploration, and the successful acquisition of ConocoPhillips’ Nigerian business unit proves that the era of the indigenous major is here. I believe the acquisition is exemplary and will serve as a benchmark for our local peers with upstream aspirations. We secured the necessary financing, executed the necessary systems and processes, and by understanding the nature of the task at hand we are well positioned to extract value for our shareholders.
Increasingly, local firms are better equipped to address the expectations of stakeholders, with growing access to capital from foreign and local institutions effectively bridging the economic gap by pulling in global sources, technology and knowledge.
What can the government do to further encourage downstream development across the sector?
TINUBU: I commend the Nigerian government for all that has been done thus far within the sector, but we still have the opportunity to achieve much more. There are several factors that could enable us to facilitate growth: the implementation of better fiscal lending terms, which will help expedite the development of critical infrastructure by local players; deregulation, which will create an efficiency-driven market; and the elimination of bureaucracy to help encourage timely investment, especially the flow of foreign funds, in the upstream segment and across the energy value chain.
Our transportation networks are rapidly improving thanks to innovative technological solutions and processes being applied by local players. However, our emergence within the broader refinery sphere is a more long-term endeavour and will truly commence when we begin to reap the gains of the Petroleum Industry Bill (PIB) and further divestments by IOCs, which will significantly increase indigenous revenue streams.
What advantages do local oil and gas companies have when operating in the region?
TINUBU: In Africa companies face all sorts of challenges in the process of reaching their goals, but they must still deliver at the end of the day. Africa is an extremely challenging continent, where we have to fight for resources. Nothing is readily given to you. As competitive beings, we embody a spirit of survival, and through this we have adapted to the difficulties of our surroundings. This innate belief and knowing that nothing is easily acquired propels local energy firms to go above and beyond in their execution and delivery within the region. This helps them stand out.
In addition, local firms know the terrain, and the relevant reforms are progressively in favour of indigenous operators. These concessions are necessary to make up for lost time as we expand our infrastructure and operations across the energy value chain. The ultimate goal or long-term strategy for most indigenous companies is to diversify to the upstream, where there is a substantial amount of profitability, and in the next few years there will be transformational activity across the value chain, with further divestment by IOCs.
How much of an impact has the delayed PIB had on sector investment from indigenous players?
TINUBU: It is safe to say that we are all biding our time; the process is not one that should be hurried along. With the necessary input from the Nigerian government, indigenous players and other key stakeholders, the PIB is likely to be the country’s most significant reform package since we first struck oil. It will change the direction of the industry and empower local companies, which, in effect, means the empowerment of the Nigerian labour force.
Knowing this, we should not be worried about the delay in passing the bill because the lawmakers know how important it is to the future of the country, and they must make sure every aspect of the document is beneficial to the country as a whole and its people.