The Oil Industry

There seems to be an interest in the makeup of the Nigerian oil industry, I thought I would share part of a report I wrote about two years ago. It is still reasonably accurate although there is much that has happened since. It will, at least, give some idea of who the players are and what is meant by “local content”.

 Political connections, marginal fields  

A factor that has historically troubled the Nigerian oil industry is that it is predominantly led by ex-military officers and retired politicians who acquired their oil leases under military rule. They have made arrangements with overseas partners and former managing directors of the NNPC who now assist them. Some have also moved on to be marketers of refined products. Their influence is pervasive in the politics of Nigerian oil and tends to shape the thrust and direction of national policy. This is best observed in the ‘marginal fields’ issue. 

There are many new ‘oil sheiks’ in the local oil business. One of Lukman’s last acts was to award new licenses to 31 companies to share 24 marginal fields (those producing less than 10,000 bpd). It was the climax of a journey that lasted almost two years. The process began two years earlier with 142 companies sending 398 bid packages to the Ministry of Petroleum Resources.

Among the fresh oil players are renowned industrialist and former president of the Manufacturers Association of Nigeria (MAN), Chief Rufus Giwa, whose company Guarantee Petroleum Ltd. (secretly partnered with Emeka Offor) was awarded 55 percent control of the Ororo field. Giwa shares the field with Otumba Solomon Oladunni’s Owena Oil and Gas Company (where the Ondo State Government has a direct stake).

Chief (Mrs.) Stella Oduah is fast becoming the amazon of the petroleum industry. Her company Suntrust is a junior partner in the ownership of Umusadege field with the Delta State Government as the major partner.

Wale Tinubu, Managing Director of major fuel marketing outfit, Unipetrol Nigeria Plc, who only recently arranged his acquisition of another oil marketing company Agip Nigeria Plc, moves to the upstream sector when Unipetrol clinched a 45 percent equity in Obodugwa/Obodeti field.

The Chairman of the Fortune Bank, Henry McPepple follows in the footsteps of the Mike Adenugas as his company Suffolk Petroleum clinched a 49 percent equity control of the Assaramatoru oil field. Prime Energy, chaired by former group managing director of the Nigerian National Petroleum Corporation (NNPC), Mr Chambers Oyibo, has the major share of 51 percent.

One of the industry's brightest stars, Mr Austin Avuru, won the 100 percent ownership of Asuokpu/Umutu field with his company, Platform Petroleum Ltd, chaired by another industry guru and former group managing director of the NNPC, Mr. Edmund Daukoru (now Obasanjo’s Oil adviser and representative at OPEC).

Spencer Onosode, son of industry guru Gamaliel Onosode, teamed up with Lateef Bello-Osagie to clinch the Umusati/Igbuku field with their joint company Pillar Oil Ltd. A newcomer, Bayo Osadere, with his company Movido Exploration and Production, won 100 percent control of Ekeh oil field.

Former group general manager of the National Petroleum Investment Management Services (NAPIMS), Mr Greg Ero, kicked out of the NNPC unceremoniously in 1999, got a consolation by the award of 49 percent stake in the Tom Shot Bank field to his company, Geo-Energy.

The South-south states of Bayelsa, Rivers and Akwa Ibom were not left out in the marginal field award.  In fact, officials said Akwa Ibom State got probably the most potentially productive of the marginal fields, Stubb Creek, through a company it floated named Universal Energy.

Rivers State teamed up with Sahara Energy to clinch a 51 percent equity in Tsekelewu field. Governor Victor Attah of Bayelsa State, has come out very well as his Bayelsa Oil Company Ltd. got 100 percent control of Atala oil field.

Imo State teamed up with business mogul Danjuma Saleh and a firm named Walter Smith, to clinch a 70 percent interest in Ibigwe oil field.

Lukman said that the marginal field program was borne out of the present administration’s belief that Nigerians should be encouraged to participate meaningfully in the core industry activities. "The Government also believes that the opening up of the industry will serve as a veritable source of employment opportunities to teeming Nigerians while further improving their technical competence," commented Lukman

That was a polite way of informing his audience that these marginal fields, which have collective reserves totaling about 1.3 billion barrels while five of the fields have a rich reserve ratio above 50 million barrels, will be competing for a share of any OPEC quota and would have a high priority in those decisions.

What is striking about the upstream side is that a large percentage of the Nigerian oil companies are chaired or owned by former group managing directors of the NNPC along with their original military owners.

Indeed, Lukman himself has been closely identified with several of the Nigerian oil companies. In the earlier investigation of the Fashanu bond buyout scandal, there was a lot of attention paid to Lukman’s relationship with Vitol, a London based oil trader which is lifting about 350,000 barrels per day of oil from Nigeria. Lukman and his close friend, Mohammed Barkindo, have been particularly close to Vitol. Barkindo is the Managing Director of Hyson and Carlson, a joint venture between Vitol and NNPC.

Other Lukman beneficiaries include Kase Lawal, Leno Adesanya (Leno Oil) and Crystal View Petroleum which is tied to Lukman's special assistant, Funso Kopolukan. Crystal View is very active in bidding for big offshore development contracts in Nigeria.

In short, there is a fox in charge of every chicken coop in the oil industry. There is a clear  preference by the NNPC (especially under Kopulukan and advisor Daukoro) to favor indigenous producers. 

This should not come as a surprise as the advisers, managers and administrators are shareholders and directors of these companies. It is no mystery in Nigerian oil circles that both Obasanjo and Vice-President Atiku have interests in several companies in the oil industry (fronted by Wahab Folawiyo and Emeka Offor, respectively) 

LIST OF INDEPENDENT LICENSEES 

Robot  # 1 | 24.05.2007 12:08

In addition to the majors, there are many local Nigerian entrepreneurs involved in the upst...Read the full article.

NewNaijaMan  # 2 | 24.05.2007 12:31

Nothing will save Nigeria other than a cleansing military coup. We truly need to start afresh. There is no other way.

Mikky jaga  # 3 | 24.05.2007 13:09

NewNaijaman, Cleansing military coup indeed! As if those military boys also do not want a piece of the action. Did you not read that most of these oily deals were done by former military men and their NNPC MDs.?:evil: :evil: Nigeria is indeed in trouble. EFCC is running after small time crooks and left all these sleaze untouched! May God save us!! The problem with the write up however is the inaccuracy of calling Victor Attah the Governor of Bayelsa State. If such fatal error can be made on things that are commonly known by Nigerians, how can we trust the rest of the write up?

ocnus  # 4 | 24.05.2007 13:13

I said it was written two years ago, before Attah left Bayelsa. It's not that I didn't know; just that I left the text intact. Sorry if this confuses you.

techsista  # 5 | 24.05.2007 13:22

=ocnus;178053>I said it was written two years ago, before Attah left Bayelsa. It's not that I didn't know; just that I left the text intact. Sorry if this confuses you. Akwa-Ibom = Bayelsa? I'm beginning to wonder...

Onukulunjo  # 6 | 24.05.2007 13:27

=NewNaijaMan;178046>Nothing will save Nigeria other than a cleansing military coup. We truly need to start afresh. There is no other way. I agree with you brother. I can understand if a 'man with the guns' is dribbling Nigerians the way Obasanjo is dribbling us. But for a civilian President to abuse Nigerians the way Baba is and no one raises an eyebbrow is beyond me. The National Assembly is just a bunch of no-gooders who are there for their pockets only. If Nigerians have any morals at all, Obasanjo and his cohorts would have been driven out of Aso Rock the day after the last presidential 'selection' exercise.

mulan  # 7 | 24.05.2007 13:48

=NewNaijaMan;178046>Nothing will save Nigeria other than a cleansing military coup. We truly need to start afresh. There is no other way. Coup is not the answer, what have previous military coups brought us?

ocnus  # 8 | 24.05.2007 14:06

Sorry, I had corrected the original text to Alamieyeseigha, not Attah. My humble apologies for not catching it.

akuluouno  # 9 | 24.05.2007 14:21

A more apt title would have been "How the Militicians and their Cronies Shared our Commonwealth". But for the Attah Bayelsa confusion, I think villagers may look at this article critically.:frown:

katampe  # 10 | 24.05.2007 19:35

=ocnus;178053>I said it was written two years ago, before Attah left Bayelsa. It's not that I didn't know; just that I left the text intact. Sorry if this confuses you. Ocnus , are you sure you are delivering the goods here ? Abi, are you taking us for a ride ? Rufus Giwa has been dead for almost four years now and you are saying you wrote this two years ago. I hope it isn't that you have lost out in the power play in Nigeria. Anyway, whatever your information is worth we should make sense of it anyhow.

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