Oando’s Choice Acquisition and What Might Have Been

Oando Plc’s Group Chief Executive Officer, Mr Wale Tinubu

By Usman Tureta

It’s inevitable that an exultant mood would normally trail the triumph arising from long, challenging periods spent in pursuit of a goal. And why not? The world should not begrudge anyone an opportunity to savour the thrill that victory brings.

So you really do not have to be at the headquarters of Oando Plc, for instance, to decipher the euphoria that must have gripped workers in the organisation as it emerged that a ministerial consent had finally been given for its $1.65bn acquisition of ConocoPhillips’ assets in Nigeria. But as is often the case, the backslapping and clinking of glasses seldom leave any room for thoughts that may dampen the exhilaration and throw the party into some sobering reflection of how the mood could have been different if the deal had gone awry. There are a few possible scenarios that may have soured the tale, but perhaps the most frightening to contemplate is the dire consequences that would have arisen if the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke had not given the seal of approval that signalled the completion of the acquisition.

To many observers, the possibility may seem quite remote, but it doesn’t yet make it any less plausible because, as history shows, the incentives for policy reversal are legendary and the basis for action do not necessarily have to sit right with logic in order for it to be considered tenable. Such points can easily be glossed over especially in a society that has grown so cynical of the state and its agents. The sad result is the failure to recognise conducts that deserve plaudits. Indeed, the final approval which has made Oando Nigeria’s largest indigenous oil producer is a culmination of the philosophy that underpinned the local content policy, conceived to give ample opportunities in the oil and gas sector to indigenous companies. It is, in large part, a tribute to Alison-Madueke’s commitment to the objectives of the policy and a bold indication that her judgments are not coloured by political considerations.

Of course, in a society where actions even by the state tend to be viewed mostly through the prism of politics, it’s understandable there is a strong allusion to that. Although not a politician, Oando Plc’s Group Chief Executive Officer, Mr Wale Tinubu, is a relation of Asiwaju Bola Tinubu, the former Lagos State governor and standard bearer of the country’s main opposition party, the All Progressives Congress (APC). The familiar picture is that such kinship with a key opposition politician is a sufficient ground to contrive some hurdles that would hamper the Oando helmsman’s bid. But there was no room for such extraneous thoughts. 

Through its Exploration and Production subsidiary Oando Energy Resources (OER), Oando signed an agreement with ConocoPhillips in December 2012 to acquire its Nigerian businesses. Despite raising the requisite funds to complete its acquisition of the assets, the closure of the deal was contingent on its fulfilment of certain conditions. These include getting government and regulatory approval, and the consent of the Minister of Petroleum Resources. The ministerial consent is the mandatory final approval for all oil and gas acquisitions in the country as stipulated under the Petroleum Act of 1969. For Alison-Madueke, there was no dithering with regard to this requirement. The overriding concern obviously was strengthening the wings of a fledging indigenous company to enable it to compete on a level field with multinational oil companies. A provision in the Petroleum Industry Bill submitted to the National Assembly in 2012 makes the foregoing particularly instructive: “...to promote the development of Nigerian content in the petroleum industry.”

You would be ecstatic too if you were in Wale Tinubu’s shoes. The official endorsement is truly a shot-in-the-arm for Oando which now has the capacity to produce about 50,000 barrels of oil equivalent per day from six fields. It has also substantially impacted its upstream strategy and operations  in very positive terms, which are key steps towards optimising its value across the energy chain.

“It has been a long journey, wherein we kept faith with our strategy and executed every milestone diligently,” Tinubu gushed after the trend-setting approval. “This acquisition satisfies our criteria for assets in production, as well as excellent appraisal and exploration prospects. We will work hand in hand with the management team of ConocoPhillips to immediately complete the acquisition.” Yet, it could have all gone awry, putting the huge investment in jeopardy. It did not, remarkably, thanks to the minister’s fortitude and fidelity to an expedient cause.

But there is a sad denouement to the tale. Rather than accolades, the minister is vilified particularly in the National Assembly where, ironically, the Petroleum Industry Bill has all but stalled. Isn’t it curious that the legislators often seem too eager to probe the operations of the NNPC or repeatedly summon its supervising minister even in relation to issues where a written deposition would ordinarily suffice, and yet seem unwilling to overcome the tardiness that has dogged the PIB since its submission? As a matter of fact, it would have been a surprise if the situation was anything less. For long, the template for national discourse has been one that almost always casts the state as the villain diametrically opposed to the common good. We see that in the scepticism that persisted even after the Senate committee on public finance had disputed claims by ex-CBN governor and now Emir of Kano, Mallam Sanusi Lamido Sanusi, that the NNPC could not account for $49.8 billion proceeds from the nation’s crude oil sales, and in the general cynicism that trails announced intentions of the government. In the public’s reckoning, the government and its agents can do no right.

There’s no doubt that the state frequently acts in ways that are less than inspiring, but the incredulity of the never-do-good perception of it is apparent in the burgeoning horde of indigenous oil and gas companies buoyed by the Nigerian content initiative launched by the government. Seplat is another bright spot on that field alongside Oando’s spectacular strides, inspired by a darring-do spirit that inspired its listing on both the Nigerian and Johannesburg stock exchanges. So some pleasant tales abound. You really do not have to look hard to find them; the necessary precondition is to rid the mind of biases that cloud our judgement.

Once that is done, the significance of the ministerial consent for Oando’s acquisition of ConocoPhillips’ Nigerian assets would be fully appreciated. It is a triumph of insight which, essentially, is the defining ethos that underpin the local content policy in the oil and gas sector as conceived by the government. Kudos to Diezani Alison Madueke for not allowing politics to becloud her judgement.