"Betting on Africapitalism"

" \n International oil companies (IOCs) have chased opportunities in the Niger Delta region for\u00a0years, given its abundant hydrocarbon resources at convenient production prices. However, their local onshore operations have often been plagued by security threats and corruption allegations. \n \n\n \n Their strategic value is now diminishing as IOCs reassess their global footprint to adjust to the new reality of the global oil market. This confluence of factors has created a window of opportunity for local companies willing to step in to revive some of these onshore assets. \n \n\n \n Heirs Holdings, a Nigerian conglomerate led by tycoon and champion of Africapitalism, Tony Elumelu,\u00a0stands out\u00a0among them. \n \n\n \n \u201cThis was a crazy window of opportunity for indigenous players to come in,\u201d Samuel Nwanze, director of finance and investment at Heirs Holding, tells\u00a0fDi, referring to the group\u2019s acquisition of a 45% participation in a major oil bloc (OML17) in Port Harcourt, the country\u2019s main oil hub, from Shell, Total and Eni.\u00a0 \n \n\n \n While OML17 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\u2019s plans to bring the bloc back to its past glory. \n \n\n \n \u201cThere has been no capital allocation to these assets over time,\u201d Mr Nwanze says. \u201cWhen indigenous players have acquired assets from Shell, the same thing always happened. They went in, did a few things and production took off.\u201d \n \n\n \n He adds that while some communities have stopped Shell from operating a few wells, things will turn out differently \u201cbecause we are an indigenous company, we are embedded within the community and we pursue a shared destiny approach\u201d. \n \n\n \n Heirs Holdings is acquiring assets in its pursuit to become an integrated energy company, 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. \n \n\n \n \u201cThis 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\u2019s a huge energy gap and we need energy to address the challenges of the continent to drive development.\u201d \n \n\n \n While the world is transitioning towards renewable source of energy, Mr Nwanze believes that the time is not ripe for Africa to do this just yet. \n \n\n \n \u201cWe\u2019ve actually had a number of conversations with big players globally, related to [renewable energy]. However, we believe that Africa is really behind with respect to the whole renewable play,\u201d he says. \n \n\n \n \u201cThe energy gap that needs to be filled will not be filled through renewable resources alone. We will see a mix of sources of energy, and this mix in the initial period will be more oriented toward traditional sources while we build a base of renewable energy generation. We definitely 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.\u201d \n "

"Betting on Africapitalism"

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