A future Beyond Oil

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A future beyond oil Dr. Layi Fatona Managing Director, Niger Delta Exploration & Production Plc

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What is Niger Delta Exploration & Production (NDEP) Plc about?

Dr. Layi Fatona, Geologist and quintessential gentleman spoke to Ruona Phido on Nigeria’s oil and gas landscape and the nation’s unpreparedness for a future beyond oil. In this no holds barred interview, he charts the tortuous course to setting up and running Niger Delta Exploration & Production Company Plc, Nigeria’s first fully integrated energy company.

NDEP is a public company. We have invested heavily in Nigeria’s upstream industry. Although, in the last 7 years we have changed the direction of our existence. Today, we are proud to say that we are the first of its type fully integrated Nigerian energy company. We produce and refine oil and gas; we process crude oil into refined products. We are the first Nigerian company that has truly eliminated gas flaring from our operations and today we deliver gas from our small production into burning energy through our own pipeline. As a Nigerian company we do everything all the big international oil companies do except we do not own our own gas stations.

The uniqueness of this company is that it is a genuinely public company that is not owned by anybody. There are over a 1,000 shareholders and the shareholding structure cuts across the country.

We have shareholders from Calabar to Sokoto, from Badagry to Maiduguri, and Abuja. They also cut across a range of people, from retired school teachers, lawyers, doctors, engineers, very few geologists unfortunately. Essentially, we have a very wide audience of ownership.

In 2007, you and Niger Delta Exploration& Production Company Plc. won the Innovation award for Drilling Fluid at the Nigerian Petroleum Golden Jubilee Awards. In what areas must oil and gas companies innovate to remain sustainable and successful?

When you think in terms of the oil and gas industry being a very high capital recurring entity and as you also know that the depth of investment capital in the country is very shallow, so for a company like us to survive there are very limited opportunities for funding. As a result of this, innovation cuts across the spectrum for us. Innovation in funding, how do we get money to run the business, how do we safely operate our business, how can we have small footprints that do not severely impact

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There is no sector in this country that does not need diversification; there is an urgent need for diversification.

the environment. For us there are quite a number of things we have done properly. We are the first Nigerian company that has eliminated gas flaring; we won the World Bank Global Award in 2015 for eliminating gas flaring from our operations. We achieved this by investing in harvesting gas, such that gas that comes with oil production is harvested.

We got our shareholders to allow us invest in a gas processing plant. We have brought this unusual innovative aspect of our business into every day operations. In addition to that, we are the only Nigerian company today that has invested in a mini refinery. We have been producing diesel for the last 5 years and indeed we are currently expanding the capacity of that refinery from 1,000 barrels per day to 11,000 barrels per day. We don’t stop; we are always trying to do new things. Currently, we are drilling five new wells from one location; this reduces the amount of space that we need to drill those wells.

You are recognized for your entrepreneurial skills, notably for promoting one of Nigeria’s most successful local refineries under Niger Delta Exploration & Production Plc. What were the high and low points in pursuing that enterprise?

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Nigeria is a gas country; there is more gas in this country than there is oil. Oil is not going to be our future, but gas.

The high point for us was the thought of doing what has never been done in Nigeria. Indeed, when we told people that we were going to produce a 1,000 barrels refinery, to a large extent some of the reactions we got was utter disbelief and ridicule. The low point was trying to find money to do it because nobody would borrow us money and when you don’t have the funds to do what you aim to do the options you have are very limited. We ended up putting our hands into our pockets. We fully funded from our own cash flow. The first mineral refinery we built was built more than 5 years ago. It was an investment of 5 million dollars, and was not an expense that was crippling. But, if you take 5 million dollars that ought to be distributed to shareholders, it is a lot of capital. Today, we are adding capacity to the refinery, it is almost a 90million dollars investment and we will be producing not just diesel but other petroleum products including marine diesel, jet fuel, Liquefied Petroleum Gas (LPG) and subsequently Petroleum Motor Spirit.

Oil is a depleting resource; do you think Nigeria is prepared for a dispensation when this resource would run out?

The big question is Nigeria prepared for any aspect of life? The answer sadly is that we are never prepared for anything in this country. See how we prepared for the World Cup, the Olympics.

What will make this any different? So the answer to your question, are we prepared? Sadly, no. Should we prepare? Positively, yes.

How shall we prepare?

It is not going to be a government thing because we cannot just rely on the government to do everything for us.

The need for the diversification of the Nigerian economy is imperative. In what sectors of the economy is this need most expedient?

There is no sector in Nigeria that does not need diversification; there is an urgent need for diversification. We are a growing nation in terms of population. We need

diversification in all aspects of our lives from population control, procurement of food, agriculture, education, health, local policing just about anything.

Industrially, agriculture, health, education and infrastructural development are very critical areas.

We certainly have not been doing sufficiently in diversification.

Some experts are of the opinion that the non pursuit of other prospects in the oil and gas value chain for revenue is a more fundamental problem.

Nigeria is a gas country; there is more gas in this country than there is oil. Oil is not going to be our future but gas. The big question is how much of gas investment infrastructural development and utilization has a country like ours planned for and put into effect. If I was going to talk about other things we should be doing I will be voting for very high end gas infrastructural development, looking for more gas because there is a lot more gas in this country.

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Mentoring and mentorship is a two-way thing. When you mentor, what you want is a sense of feeling that the people you are mentoring are going to turn out to be good people for themselves first.

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The Nigerian economy is slowly recovering from a recession, what lessons do you think we should have learnt from this experience?

We hear that the economy is recovering but there is a bit of a controversy as to what rate. For the ordinary man on the street does he actually see the impact of the improvement in the economy? In our trade we have seen the presence of oil drastically collapse from over $120 per barrel to less than $40 that was a real debilitating blow to our economy. The profound lesson for me is how much of inward looking are we achieving in the oil industry today. We still produce about 2 million barrels of oil and export everything. The lesson we ought to have learnt is how not to depend on oil export. This is a country that sends crude oil out, earns money and spends that money to bring refined products. Today, Nigeria should be talking more about energy independence and I do not believe we have properly learnt that lesson.

initially making the rounds, the office of the President had come to say the very good reasons why assent was withheld. Let us look at the Petroleum Industry Bill in the society. If you take a journey across Africa to Ghana, Kenya, Uganda and even South Sudan which is only 5 years old, they have managed to sit down and put together a Petroleum Industry Bill that has been passed by their legislatures.

We have been on this bill for the past 10 years. A bad law is better than no law at all.

The most important thing is the message that is passed on to the investing world, which is, this is not a country that is ready to attract new necessary capital for the petroleum industry. Until we can sit down and articulate a law that will get us on the path of implementation of the Petroleum Industry Governance Bill (PIGB), we are not going to be able to attract any new financial institutions or capital. It is a

very dark situation we are in and whatever will make us be able to have the PIGB assented to by the President, the legislature, industry and the ministry should come together and rally to address the issues that have been raised.

Many young men and women have been mentored by you. But many have expressed concerns about a paucity of mentors in the generation succeeding yours. Is there cause for worry?

Mentoring and mentorship is a two way thing. A mentor has to have people to mentor, there has to be a mentor and mentee. I have a number of young people I mentor. When you mentor what you want is to have a sense or feeling that the people you are mentoring are going to turn out to be good people for themselves first. I don’t believe there is a dearth of

The President recently withheld assent to the Petroleum Industry Governance Bill. What does this portend for the oil and gas industry?

We have reasons as to why the President eluded assent. Contrary to what was

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mentors. Young people just need to prepare themselves and be disciplined. This society has a lot of people who want to give back. In my case for instance, the society has been very good to me, I appreciate that and this is why in any little way I can help any upcoming entrepreneur I will go out of my way to share my personal experiences.

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Education is a key tool for a nation’s development and it helps drive economic growth. Do you think Nigerian Universities are adequately equipping their graduates with the right skills that will enable them change the oil and gas industry and compete with their peers globally?

Universities in Nigeria are not adequately resourced. I go around universities, I have relationships with geology institutions across the country and I can see how the Universities are struggling to cope with the rising number of students they have to deal with. The problem of these universities is the same problem plaguing Nigeria, there is just not enough of everything. There is an insufficiency of capacity, insufficiency of skills. My reaction to this is that there is still no reason why we should proliferate. I strongly believe that even in this period of scarcity of infrastructure we should be very bold to decide for ourselves if we are just going to have a few

few things I will love to do.

In all I am looking forward to having all the time in the world for myself and family.

How do you relax?

If I was not a geologist, I will opt to be a geologist. centres of excellence, we should recognize them and keep them, so that we know that’s where we should go.

When there are too many universities, there are no quality lecturers.

Congratulations on your recent retirement from Niger Delta E&P. What areas of human endeavor will you be engaging your attention to?

I will very much be around the industry. I will hope that I can mentor and write my story. I have always told people I want to go back to School to study Law, not because I want to be a practicing lawyer, I just want to be able to go after those people who have cheated me in life. There is so much to do for somebody with my constitution and I hope that I can have the focus to do the

I have a group of friends who I play golf with every Sunday that really helps me relax.

You are a Petroleum Geologist with over 39 years of oil industry experience. If you were not a geologist what profession would have attracted your fancy?

If I was not a Geologist I will opt to be a Geologist. I have only known myself as a Geologist; it is a profession that has shaped my life. Even as Managing Director of the Company I see myself as a practicing Geologist rather than as personnel that manages the affairs of the business of the Company.

Geology has been my life, my passion and if I have a second chance I will always want to be a Geologist.

Interview by Ruona Phido Ruona is a Business Analyst and a Communications, Media and Society graduate from the University of Leicester. rphido@elevato.com.ng

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Photo Credit: Bobo Iso