IN FOR THE LONG HAUL

Nigeria 2017 | ENERGY | INTERVIEW

TBY talks to Chief Tunde J. Afolabi, Chairman & CEO of Amni International Petroleum Development Company Limited, on reaping the most from low oil prices, the impact of new regulatory measures, and the challenges of deep-water exploration.

 Chief Tunde J. Afolabi
BIOGRAPHY
Chief Tunde J. Afolabi is the Chairman & CEO of Amni International Petroleum Development Company Limited. He earned a bachelor’s in geology from Franklin & Marshal College and a master’s in geology from Tulane. Chief Afolabi is also a product of the prestigious Lagos Business School. He worked as a Senior Geologist with Texaco from 1974 to 1978 before joining William, Fenix & Scission as an engineering geologist. He also worked with Mobil as a project geologist before joining Exploration Consultants Inc. In 1993, Afolabi incorporated Amni International Petroleum Development Company as a founding Managing Director and CEO.

Everyone is talking about the low oil prices. How can investors like you take advantage of the low price environment?

Just as the oil prices have gone down, so have the costs, at least the negotiated costs of services. What used to cost USD100,000 a day has gone down to about USD60,000 a day; therefore, you get more done for the same amount of money than you did say a year and a half ago when oil was USD110 a barrel. That means that you can put more wells in the field to get more oil out. Equally important is that the value of assets is lower, meaning this is the best time to buy assets if you have the capital. Prices are expected to rebound, so if you bought an asset six weeks ago, you have gained almost 20% value. The companies that will survive will know how to rationalize, cut costs, and become more efficient.

The government is working on a new petroleum regulatory framework. How do you expect that regulation to influence the future of the sector?

If it is more successful, we will see a huge influx of capital investments in the industry. If the government establishes a more user friendly fiscal regime, then the IOCs and other investors will be eager to come in and take on new blocks, conduct new seismic studies, and discover more oil. If the government has a better approach than the one that was applied in the past, we are going to see a real turnaround in the influx of investments in the oil and gas industry.

In terms of your production of crude oil and gas, how has it evolved since we talked last year?

On the barrel equivalent we have more gas than oil. We have had a decline of production, which is why we are drilling additional wells to increase or at least plateau our production. We also have a new asset OML52, which we are going to start developing once we are able to come to an agreement for the operation. By the end of 2017, it will produce about 20,000bpd. But more important for us is the gas. We have more than 3tcf of gas and are looking more aggressively at LNG. The irony is that you actually have a healthy gas market along the West African corridor. Ghana's requirement is almost 3 million tons of LNG/annum and we have not even explored other countries along the West African corridor. Beyond that, the Indian market is aggressively building its infrastructure. It is talking about adding another 20 million tons of LNG into its system by 2020.

How have your operations in Ghana evolved since you acquired the Central Tano offshore block in 2014?

Oil and gas exploration has a long gestation period, particularly in the deep water. We are in the exploration phase still, and unfortunately 80% of our block is in the area under discussion in the Cote d'Ivoire and Ghana boundary dispute. We hope that is resolved soon so that we can push ahead with our exploration commitments.

Do you see more women participating in the oil and gas sector in Nigeria?

In the schools you already see more women than men. We are seeing more and more women working for IOCs; however, within the indigenous companies there may be a couple of women, which is not as impressive as we would like.

What are your expectations for the year ahead?

We are very bullish on what we are doing. Within the next three months, we will put together almost USD500 million in loans to develop our existing assets. We will probably be looking at close to a billion dollars in the next two years for growing the gas projects. In 2016, we think the oil price will stabilize and we feel things will definitely get better for the industry.