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Chief Tunde J. Afolabi

NIGERIA - Energy & Mining

45 million barrels of oil in Tubu and the same in Okoro

Chairman & CEO, Amni International Petroleum Development Company

Bio

Chief Tunde J. Afolabi is the founding managing director/CEO of Amni International Petroleum Development Company in 1993, now the Chairman/CEO of the company. He received his BA in geology in 1973 from Franklin & Marshall College, Lancaster Pennsylvania US, and an MSc in geology in 1975 from Tulane University, New Orleans, Louisiana, US. He started his career with Texaco Inc. in New Orleans Louisiana in 1974, and continued with Mobil Inc in Dallas, Texas in 1979. He is a professional geologist with over 40 years of oil and gas exploration and production experience from international and independent oil and gas companies. He is a member of the American Association of Petroleum Geologists (AAPG), a past President of the Nigerian Association of Petroleum Explorationists (NAPE), and a council member of the Nigerian Association of Indigenous Production and Exploration Companies (NAIPEC). He was conferred with Doctor of Technology (Honoris Causa) by Ladoke Akintola University, Ogbomosho, Osun State, Nigeria in 2009, and Doctor of Geology (Honoris Causa) Ajayi Crowther University, Oyo, Nigeria, 2017.

"We have about 45 million barrels of oil in Tubu, about 45 million barrels of oil in Okoro, and 3.2 trillion cubic feet (tcf) of gas between Okoro and IMA."

Can you tell us about your current gas projects and the progress of attracting project funds?

We estimated it would cost us over USD3 billion to develop all our assets at Tubu, Okoro, and IMA fields. We have about 45 million barrels of oil in Tubu, about 45 million barrels of oil in Okoro, and 3.2 trillion cubic feet (tcf) of gas between Okoro and IMA. We recently went on a roadshow to get companies, financial institutions, and off takers to look at our assets and investment opportunities, where we received a positive response. We have also reached out to banks in Europe and the US, who are currently going through the due diligence process. We hope to be able to have the transaction closed before the end of the year.

Are you currently focusing more on gas than oil?

In Nigeria, we find gas when we are looking for oil; I do not think there is anyone who has actually gone out looking for gas in this country. It costs the same amount of money to drill a gas well as it does to drill an oil well, and globally the price of oil is perhaps twice or even triple the price of gas. Therefore, I would rather put my money into a 200 million barrel oil field than a 200 million barrel equivalent of gas. However, more often a gas reservoir has huge yields compared to oil. Most oil projects have a lifetime of five to 10 years; however, for gas it is about 25 years. Given that Nigeria has three to four times more gas than oil, companies such as ours should focus more on gas; in our discovery of gas reserves we should look to harness and monetize the gas as we go along. The government is making a requirement that when looking for oil, companies must find a solution for the gas before they are allowed to produce oil. We have too much flaring, which is like taking a pattering touch to it. This is what we have been doing with gas, which is a loss of revenue and also ruins the environment; we have serious pollution in the Niger Delta as a result of gas flaring. In Nigeria, we have power issues because we do not have gas; thus, we need to make sure we monetize the gas while also reducing environmental pollution.

What is your current production volume?

Our current production is about 20,000 bpd. After we conclude the ongoing developments, we will get closer to 50,000 bpd and about 700 mmscfd of gas per day. Our ultimate goal of 200,000 bpd is realizable within three to four years as we are pursuing several assets in the region as well as a prospective license in Ghana, where the field could easily yield 70,000 bpd.

How do you see the interaction between the IOCs and the indigenous companies in developing the sector?

I see significant requirement for development in the service sector. Close to 80% of the money we spend in the oil and gas industry goes out of the country; so if only 20% stays in the country, that is a fraction of what should stay and therefore not sustainable. We currently spend USD8 billion a year in the operations of oil and gas in Nigeria. If we could develop the service sector and keep 60% of that, that is USD5 billion that could be kept within the economy. This in turn would increase employment, work transfer skills, technology, and more. However, in the upstream, there is a great deal of cooperation right now between independent indigenous oil and gas companies and the IOCs. It is a symbiotic relationship, where IOCs do not want to lose their assets and the only people they can get to buy them are indigenous companies. There is a great relationship. In fact, 90% of IOCs are run by locals so Nigerians are the ones being trained and developed by the IOCs.

How do you see the crisis in the Niger Delta being managed?

The problem is that the IOCs say they have done a great deal, while the local communities say they have done nothing. I see truth in both, so it is about reaching a balance. It is difficult to take someone’s asset and not leave something behind. We had communities in the Niger Delta that say that they have had better treatment from Amni than Shell, which is a great testament. One should treat people the way they want to be treated and they will respond well. We ask the community to put forward contractors and we tell them to bring a letter of credit from a known bank so that if the job they perform is not up to scratch, then the bank will repay us. The bank supervises the contract and in doing so we have brought services to the community and empowered them. The model is something that the IOCs need to consider. Indigenous companies have more onshore dealings and are more successful, not because they are Nigerians, but because they are more genuine. They will sit down together with the host communities and talk things through.

What are your expectations in 2018?

I can only talk about the global economy because the Nigerian economy hardly affects our operation. I hope we will be able to stabilize oil prices at between USD50 and USD60 a barrel; if we were to do that, at the very least the plans we have for 2018, which is to reach 50,000 bpd, will be achievable. For these three projects, we will be kept extremely busy for next year; 2018 will be a great year for us. We are looking at a few assets that we should be able to acquire that will allow us to look further into 2019 and 2020.

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