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GLOBALOUTLOOK EXECUTIVEDECISION


BettingonAfricapitalism I


nternational oil companies (IOCs) have chased opportunities in the Niger Delta region for years, given its abundant hydro-


carbon resources at convenient production prices. However, their local onshore operations have often been plagued by security threats and corruption allegations. Their strategic value is nowdiminishing as IOCs reassess their global footprint to adjust to the new reality of the global oilmarket. This confluence of fac- tors has created a windowof opportunity for local companies willing to step in to revive some of these onshore assets. Heirs Holdings, a Nigerian conglomerate led by tycoon and champion of Africapitalism, Tony Elumelu, stands outamong them. “This was a crazy windowof opportunity


for indigenous players to come in,” Samuel Nwanze, director of finance and investment at Heirs Holding, tells fDi, referring to the group’s acquisition of a 45% participation in amajor oil bloc (OML17) in Port Harcourt, the country’s main oil hub, from Shell, Total and Eni. WhileOML17 currently produces about


27,000 barrels per day (b/d), it produced as much as 100,000b/d in its heyday. Global banks and investors backed the deal with a $1.1bn financing package, betting on Heirs Holdings’s plans to bring the bloc back to its past glory. “There has beennocapital allocation to these


assets over time,”MrNwanzesays.“Whenindige- nous players have acquired assets from Shell, the same thing alwayshappened. Theywent in, did a fewthings and productiontook off.” He adds that while somecommunities


have stopped Shell from operating a fewwells, things will turn out differently “because we are an indigenous company, we are embedded within the community and we pursue a shared destiny approach”. Heirs Holdings is acquiring assets in its


pursuit to becomean integrated energy com- pany, serving other African countries beyond Nigeria. The company, through subsidiary Transcorp Power, owns a gas-fired power plant


and is looking at developing assets along the whole value chain of the energy industry. “This asset [OML17] also has a significant


amount of gas reserves, and these reserves feed into the huge gap that we have in the country, with gas being a precursor for energy. In Africa, there’s a huge energy gap and we need energy to address the challenges of the conti- nent to drive development.” While the world is transitioning towards


renewable source of energy, Mr Nwanze believes that the timeis not ripe for Africa to do this just yet. “We’ve actually had anumber of conversa-


tions with big players globally, related to [renewable energy]. However, we believe that Africa is really behind with respect to the whole renewable play,” he says. “The energy gap that needs to be filled will


not be filled through renewable resources alone.Wewill see a mix of sources of energy, and this mix in the initial period will be more oriented toward traditional sourceswhile we build a base of renewable energy generation. Wedefinitely have our eyes on the ball, but we are focused on addressing the immediate and medium-term issues that we see, as far as Africa is concerned.”■


IN AFRICA, THERE’SAHUGEENERGYGAPANDWE NEED ENERGY TO ADDRESS THE CHALLENGES OF THECONTINENT TODRIVE DEVELOPMENT


14 www.fDiIntelligence.com February/March 2021


AS INTERNATIONAL OIL COMPANIES REASSESS THEIR GLOBAL FOOTPRINTS, OPPORTUNITIES ARE APPEARING FOR LOCAL PLAYERS SUCH AS NIGERIA’S HEIRS HOLDINGS. JACOPO DETTONI REPORTS


Vital asset: the Niger Delta’s oil production has long had great significance for the Nigerian economy PROJECTPROFILE


OIL MINING LICENCE 17 Target production 100,000 barrels per day


Deal value $1.1bn


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