The recent announcement by Yinka Folawiyo Petroleum of commencing crude production in the Aje field, Western Nigeria, puts Chief Tunde Folawiyo in the history books of Lagos State and Nigeria’s development, writes SAM NWOKORO
As Lagos inches towards its golden jubilee next year, definitely, chroniclers of Eko developmental paradigm will find it difficult to omit corporate names like Yinka Folawiyo Petroleum (YFP).
Yinka Folawiyo Group of companies is one of the oldest indigenous conglomerates in the country that survived various phases of the nation’s economic crises since 1957. From the days of cocoa, groundnut, rubber and palm oil boom as main revenue earners to both the regions and the central government, up to the periods of oil boom down to the present neo-liberalisation, the Yinka Folawiyo Group has undoubtedly weathered the storms. It has not fizzled out of business like other local conglomerates that went moribund at the advent of military regimes in the body politic of the nation. It has been able to maintain the forte, weathering the vagaries that pervaded the business environment. That ‘never fail’ motto seemed to have enabled the group to delve into riskier ventures, even after the demise of its patriarch, Yinka Folawiyo.
It is a statement about dynamic management methods that since the older Folawiyo’s death, the business group has not slumbered. This can be seen in the latest commencement of production of crude from the Aje field, OML 133, which it operates in partnership with Panaro Oil and Gas, a European exploration and production company. The other partners are New Age Exploration Nigeria Limited, EER (Colobus) Nigeria Limited, and PR Oil & Gas Nigeria Limited.
OML 113 is located at the outskirts of Lagos, near the Dahomey Basin. This will perhaps be the second major attempt by an indigenous company to venture into that lucrative virgin field. Energy experts have long posited that sustained exploration and production is in the interest of the nation’s aspiration to shore up dwindling reserves. Politically, it will decelerate over-exploration and production activities in the heart of the Niger Delta states where a whole set of factors conspire to make production activities in the area become increasingly risky, both to the natives, the environment and the country at large.
Earlier this month, the management of YFP formally announced to the world that crude oil is now flowing from the belly of its various rigs and installation at OML 133 and being stored. Its foreign partner in the project, Panaro, confirming this in a global press brief, stated: “Panoro Energy ASA, the independent E&P company with assets in Nigeria and Gabon, notes the recent announcement made by its partner, the Operator of OML 113, Yinka Folawiyo Petroleum Company Limited, and is pleased to announce that the first oil production from the Aje field, offshore Lagos, commenced on May 3, 2016.”
Subsea installation activities had been underway at Aje since January and were completed early March ready for the hook-up of the Front Puffin FPSO, which arrived Nigeria on March 16.
Oil produced from the Aje field will be stored on the Front Puffin which has production capacity of 40,000 barrels per day and storage capacity of 750,000 barrels.
Flow rates will be provided in Panoro’s next operations update, following a period of commissioning and well stabilisation.
Panoro’s Chief Executive Officer, John Hamilton, said: “We are extremely pleased to announce the start of first oil production at Aje. This is a transformational milestone for Panoro and represents a great achievement by the Aje project teams. It is also a key building block in our strategy to become a full cycle E&P Company focused on West Africa. The commencement of production at Aje is also significant for Nigeria, as it is the first commercial production for the country in the emerging Dahomey Basin.”
Aje field is situated in water depths ranging from 100 to 1,000 metres about 24 kilometres from the coast. It contains hydrocarbon resources in sandstone reservoirs in three main levels – a Turonian gas condensate reservoir, a Cenomanian oil reservoir and an Albian gas condensate reservoir.
Significance of OML 133
In the chequered history of Nigeria’s efforts to involve local players into active exploration and production (E&P) activities in the energy sector, there has been the erroneous perception that such is feasible only if the entrepreneur is ‘loaded’. This has for long time hindered many local players who rather opted to remain vendors of refined petroleum products and broker agents for big foreign players.
Talking about the Folawiyo/Panoro breakthrough, energy expert, Fred Okogie, said: “It shows that the federal government’s local content policy drive in all phases of the economy is yielding fruit. When the talks about selling off marginal fields to local players were being made, around 2002, many thought it would not be possible, that local players do not have the technical capacity, resources and manpower to bid for virgin fields and delve into the nitty-gritty of exploration and production, not to talk of meeting up all the environmental challenges, host communities’ restiveness and uncertainties in regulatory regimes.
“Those scary comments made some slack back. But those who dared, I believe, are not regretting their decisions now. Nigeria has many lucrative fallow fields which need to be active to shore up national reserves. Yinka Folawiyo and Panaro ASA have by this latest feat joined the league of other indigenous field operators like Seplat, Lekoil, Chrome and Orient who invested in their fields, and I am sure they are not going to regret the investment. It is going to be a thrilling experience for the partners because Dahomey Basin is still virgin. It is not hosting many operators yet. So they are going to have proficient hauls in the years to come. The crude is sweet crude and the coast of Dahomey is not yet a safe haven for militants and terrorists. So they deserve congratulations.”
Putting Lagos on the map
The investments of Yinka Folawiyo in the E&P sector is of strategic growth prospect, not only for the group, but also in the economic growth matrix of Lagos and the entire South West region where the group’s founder, the late Wahab Folawiyo, started business life in 1957. According to experts, the OML 133 holds reserves that can meet the energy needs of Lagos for the next 10 years.
Lagos is positioned to benefit from crude supplies from the several refinery projects being planned by various players in the hub of Nigerian economy. Integrated Oil and Gas Company, an indigenous oil company, plans to commission a modular refinery near Ibafo. And the President of Dangote Group, Aliko Dangote, and his foreign partners are planning a mega refinery in Epe, Lagos. So, before a projected 2025 date, Lagos will be saturated with petroleum products, to the extent of becoming an export base for refined petroleum and associated products.
Besides, according to experts, there is a ready market – Lagos and the adjoining states. As one observer noted, “Lagos can hardly be glutted with oil and gas. Many investors are regularly setting up shops. The state’s development plans are mammoth and in a few years will need huge supply of energy. Neighbouring West African countries are regularly looking towards Nigeria for their oil supply needs. So crude oil storage platforms close to Lagos will solve the risks of transporting crude or refined petroleum products from other parts of the country. The Yinka Folawiyo/Panaro ASA partnership’s bringing the field into operation augurs well for the country’s economic geo-political complementarity in the energy sector.”
Forward-looking boss
It takes passion and focus to delve into uncharted waters. It is something of a credit that OML113 commenced production at a period of great need for energy for immediate and near-future purposes. Besides, it shows the company’s management is responsive to federal government’s push to increase national reserves. The chairman has also, in public estimation, succeeded in consolidating on the business dynasty of the late mogul who created one of the most enduring indigenous conglomerates in Africa.
The citation of Forbes magazine when it named the chairman of Folawiyo Group Africa’s number 39 richest man in 2014, noted: “Tunde Folawiyo is the MD of Yinka Folawiyo Group Conglomerate with interest in energy, agriculture, shipping, real estate and engineering. His father, Wahab Folawiyo, a well-known Nigerian businessman and Islamic leader, started the group in 1957 as a commodity trading outfit and served as chairman until 2008 when he passed away. Folawiyo now calls the shots. The company’s exploration firm, Yinka Folawiyo Petroleum, owns 60 per cent interest in an oil block that contains the Aje offshore field. Other assets include minority stakes in Nigeria’s Access Bank and mobile phone carrier, MTN Nigeria.”
The man
Tunde Folawiyo was the pioneer Managing Director/Chief Executive Officer of Yinka Folawiyo Petroleum Company Limited and Folawiyo Energy Limited. He led several international strategic ventures in petroleum distribution through F. Energy, electrical power in partnership with AES Nigeria Barge Limited, and banking. He is a leading figure in the Nigerian business community. During the 2005 recapitalisation/consolidation … exercise in the banking industry, he led Marina International Bank Limited into a successful merger arrangement with Access Bank Plc.
He serves as the Chairman of E-Motion Advertising Limited as well as Non-Executive Chairman of Travant Capital Partners.
Folawiyo sits on the board of MTN Nigeria, Unic Insurance and Access Bank, among others. He is also a board member of African Leadership Academy (ALA), a pan-African institution in South Africa.
He was appointed honorary Consul of Barbados in Nigeria.
He serves as the Vice-President of Nigeria Association of Indigenous Petroleum Explorers and Productions (NAIPEC).
Educated at the London School of Economics between 1977 and 1985, he obtained B.Sc. Economics in 1980, specialising in industry and trade; LLB in 1984 and LLM in 1985 and was called to the Bar of England and Wales (Honourable Society of the Inner Temple).