COVER STORY
‘We were very appreciative of the Senegalese because they gave us a break, they put a lot of trust in us and we were determined not to let them down’
company to buy assets from BP in the North Sea for £200m. At the last minute the board had turned it down, as they decided they were no longer going to invest in Europe. It was a much larger investment than they had planned, but
Heavey decided if the bank would give them the majority of the money, they could raise the balance from shareholders. The bank came back and said yes, and the deal was done with BP. The next hurdle was to convince the British government. “We were taking over 16 platforms in the North Sea, so this small Irish company was going to be managing this huge portfolio, 16 platforms in the North Sea. “We had to hire a complete team of people just to run that proj-
ect. We did that in six months and then got all the approval from the government departments. We really did a great job on that asset because within 12 months we had increased the cash flow from £10m a year to £100m a year. That was a big step change in the business.”
The exploration route The next step change came in 2000 with a major move into exploration, the one area that was missing, according to Heavey. “We decided to solve that problem by another acquisition in 2004 when we acquired a company called Energy Africa. “That was a unique type of deal. Energy Africa was set up by a load of African businessmen to become a pan-African oil company floated on the Johannesburg Stock Exchange. They were very successful explorers, but they weren’t operators so they weren’t very commercial.” Just as Energy Africa was getting into its stride, it was subject to a hostile takeover from Petronas, the Malaysian national oil company, which ended up with 65pc of the business. “But they couldn’t get the other 35pc, so the company was deadlocked in this battle between the two warring shareholders and there was no solution to it.” Heavey decided to approach the African shareholders. “I went in and said, ‘Listen, we’ll make your dream a lot better, your vision for a pan-African company. If you join us and become sharehold- ers at Tullow, together we will have exploration operations, and a much bigger company, a much better commercial vehicle’.” They agreed to swap the shares for Tullow shares, and the
newly enlarged company bought Petronas out in cash. “That was all completed by 2005, and at that stage we had a company worth about $1bn.” Tullow Oil has not looked back since, growing in the last five years to a company worth nearly $20bn today. “And in that same period of time we’ve added about $130bn of value for African countries in cash flow, so it’s a huge success and it’s been acceler- ating quite rapidly over the past few years.” Heavey’s passion for Africa is evident, and Tullow Oil’s cor- porate social responsibility policies in the region are widely
recognised as reaching far beyond lip service. “To us it’s part of the culture we started off in Senegal in the early days when we were working with the communities – we piped water into the villages, we built schools, hospitals, we trained all the local staff, so it was very much part of how we did business. “Today, we’ve taken that a stage further and we’re actually now working with the universities and schools in all the countries we’re working in, on business programmes, entrepreneurial pro- grammes to help the African business community to expand and improve.”
Opportunity Africa Heavey believes there are a lot of misconceptions around the so- called challenges of doing business in Africa. “I think the reason that we’re successful as a business is because we don’t have com- petition there,” he says. “ Everyone thinks Africa’s a tough place to work and most companies, especially Irish companies, they work in the OECD countries, they compete and beat each other over the head for margins and contracts and jobs, when there’s a whole world of opportunity out there in Africa where there’s no competition.
“It shocks me because 25 years ago we went into Africa and we built a great business out of it, and those opportunities are still there. Everywhere you go in Africa there’s great opportunities. Yet people think that it’s this big dark continent, they think about corruption, they think about political instability. “This is a wonderful continent, a great place to do business and I would encourage companies to go out and visit these countries, find companies that they can co-venture with, set up mentoring schemes and supply them with skills and equip- ment. You know, you’ll end up with fantastic businesses and open up your horizons.” “Everybody is looking at India and China and they are all com-
peting with each other to crack these markets,” he says. “Africa is sitting there and nobody is doing it. There is this perception that it’s this difficult place to do business. In actual fact it’s the easiest place to do business in the world.” He offers similar advice to those graduating from university
today. “I would say to the kids that are coming out today is get out, spend some time in countries like Uganda, Gabon, Ghana, and look at the opportunities. Now is the time to go and see these opportunities, now is the time to expand your horizons. It will change the way you see the world.” As for his Alumnus of the Year award, Heavey is delighted, but
characteristically modest. “It may sound bit like those Oscar acceptance speeches, but what we’ve achieved at Tullow is about a lot more than me. It’s about a great team of people. It always comes down to having great people working with you.”
Ann O’Dea UCD BUSINESS CONNECTIONS 21
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