OML 29: Aiteo’s milestones, fake news and mischief, by Chuba Nnamdi

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Criss Jami, a young American poet and philosopher once wrote that “a rumor is a social cancer: it is difficult to contain and it rots the brains of the masses. However, the real danger is that so many people find rumors enjoyable. That part causes the infection”. The people often guilty of spreading rumours are those with crab mentality.

Crab mentality is a phrase that originated from a widely told Indian story of crabs left in an open bucket. While any one crab could easily climb to the top, its effort is often undermined by others, ensuring the group’s collective downfall. It is a way of thinking best described by the phrase “if I can’t have it, neither can you”. Though this crab story does not originate from Africa, it seems it has found its greatest expression on the continent. In this side of the world, we strangely find fulfilment in dragging each other down than in celebrating our collective successes. From childhood, we are taught to be careful when we make good progress. Fast forward to this age, this mindset pervades our society, in business and in politics, even among the most civilized of men.

Very recently, some individuals have been playing the crab on Aiteo and its management. While the energy firm and its number one figure, Benedict Peters continue to attract several local and international attention for impact in the oil and gas sector, mischief makers have also upped their game in undermining the success of the company, which emerged within the space of three years as the largest indigenous producer of crude oil in Nigeria.

Their major tactic has been to continue to churn out spurious reports about the company and its management on some news-for-hire online platforms. The latest in the series of attacks dwells on how Aiteo is struggling with repayments of some debt and how it may fail to meet up with the renewal fee of one of the most prolific oil wells in sub-Saharan Africa, which Aiteo operates, OML 29.

Coincidentally, this report came at the time Aiteo took a huge step towards securing its control of the asset for another 20 years. Sighted documents and information from reliable sources, reveal that the company has met all conditions precedent for the renewal of its oil mining license. Most importantly, it has finalized payments of the sum of about $82million to the Department of Petroleum Resources in respect of the license renewal. Aiteo paid the renewal sum in six tranches, with the last payment made on 22 January 2019, exactly a year after the first instalment.

Sometimes, you have to make moves in silence and let your success makes the noise. This seems to be the strategy Aiteo might have deliberately or unintentionally embraced. Ever since Aiteo won its lucrative oil exploration contract, it has had to combat with those who will stop at nothing to bring it to its knees. In many instances the false assertions are similar, while some are just outrightly ridiculous. Perhaps a little background on the said asset may help put in proper perspectives the motivations for the attacks.

OML 29 is a large block located in the southeastern Niger Delta containing 11 oil and gas fields, which include the Nembe Oil Field, Santa Barbara Oil Field and Okoroba Oil Fields. It was first leased initially to Shell Petroleum Development Company (SPDC) in 1964. It was renewed for 25 years till 1989, and then for another 30 years which terminates in June 2019. Aiteo E&P Limited, in 2014 emerged the preferred bidder and operator after a very competitive bidding process undertaken by the Royal Dutch Shell, ENI Group and TOTAL of their combined 45% interest in the Oil Mining Lease 29. Aiteo also acquired a related facility, the Nembe Creek Trunk Line (NCTL), a 100 kilometres long pipeline with a capacity of 600 thousand barrels per day.

Upon takeover of the operatorship of the asset, Aiteo ramped up the production from the lease area from a meagre 23,000Kbpd to a peak of 100Kbpd within a year.  This enviable performance was equally given impetus by the entrepreneurial spirit of founder Benedict Peters, who amidst collapsing oil prices, remained determined to demonstrate the tenacity of Nigerian entrepreneurship.  Benedict Peters is one dogged entrepreneur who has also risen above a shadow of controversies to prove himself as an African business leader.

Findings reveal that the loan component of the acquisition of the OML29 assets was syndicated by local and international lenders who have supported Aiteo through the challenging periods and operations. Despite, fluctuations in the international oil price and the very challenging and difficult operating environments, Aiteo has, with the full support and collaboration of lenders, in the past year, remained consistent in meeting its debt repayment obligations. This is a profoundly remarkable step, given the vagaries of the industry where it operates.

Most of the onshore oil mining licenses in Nigeria will expire during 2019 and OML29 is one of them.   The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, has said recently that the Federal Government is targeting about $2bn from these renewals. He also mentioned that the overall contributions of Aiteo and other indigenous operators to national oil production is currently around 11 per cent. “I would like to see that grow to about 30 per cent in the next couple of years,” Kachikwu said. There is no way to achieve 30% if we would rather celebrate our failures than our successes.

The ministry of petroleum and the regulatory authorities have been in discussions with all producers in the country regarding early renewal of the licenses and are currently implementing the modalities.  Aiteo has been part of this engagement processes. Its position with respect to royalties has also been comprehensively addressed, to the satisfaction of all stakeholders including the Federal Government of Nigeria.

In the past few years of exploration, Aiteo like the IOCs had to contend with massive bleeding out of crude oil in the Niger Delta region. Crude theft remains nation-wide scourge plaguing the industry in Nigeria. With the operation of a key national oil delivery infrastructure in Nigeria, the 100Km Nembe Creek Trunk Pipeline (NCTL) traversing the most difficult swamp environments in the delta, all injectors into this line are badly affected by the oil theft activities. Aiteo continues to strengthen the security architecture on this key piece of infrastructure at considerable cost whilst hinting on its bid to develop alternative evacuation options.

According to inside sources, Aiteo’s alternative route project is hugely expensive and has, understandably, a long lead plan given its financial, engineering and logistics demands and complexities. Once the alternative evacuation process is fully implemented, it will also result in substantial losses for key participants in the transportation process currently in place, and those who have perfected the act of diverting crude at the expense of Nigeria’s weak economy.

Aiteo’s growth within a space of three years has been phenomenal. When people ask ‘What are the success stories from Nigeria’, Aiteo’s exploits should readily come to mind, and without doubt, renewal of its operation license for the next twenty years positions it to contribute more significantly to Nigeria’s economy in a sustainable way, while also strengthening its other energy-related business interests.

Chuba Nnamdi writes from Lagos

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