Nigeria/France: Mike Adenuga – ‘This is a strategic relationship’
The founder of Glo and Conoil Mike Adenuga credits several of his successes in business to partnerships with French firms
By Nicholas Norbrook, in Lagos
When Covid-19 hit in March 2020, it came at a difficult time for the oil market. A price war between Russia and Saudi Arabia had pushed prices to the floor in February, when suddenly the pandemic drastically reduced consumption, sparking a worldwide rush to find storage for crude.
“We were concerned about where this pandemic was going,” says Mike Sangster, the CEO for TotalEnergies (formerly Total) in Nigeria. “We managed to get our hands on a few PCR machines [for Covid-19 testing], some of which we used, and two of which we donated to Rivers State. We also donated an oxygen plant to Lagos State.”
Despite the lockdown, thanks to TotalEnergies’s 1,300 staff and many contractors “we didn’t lose a barrel because of the pandemic,” says Sangster. Nigeria was short of revenue, “so we thought it was important to keep government revenue flowing.”
TotalEnergies’ deepwater Egina project began producing oil in 2018 and it is now providing 10% of Nigeria’s total oil production at 200,000 barrels per day. But, while the last three big oil investments in Nigeria came from TotalEnergies, the pipeline for projects going forward is more sparse.
A Wood Mackenzie report shows that, in the past five years, there has been $70bn committed to Africa for upstream projects – and only $3bn of that was going to Nigeria. “So there has been a real lack of investment,” says Sangster.
“Companies have been reluctant, partly because of the oil price crash and, since 2019, a lot more concern about what is going to be in the Petroleum Industry Bill.” TotalEnergies is developing one project at present, Ikike, a “relatively simple” shallow-water project that is a one platform tie-back to an existing facility.
Part of a national reorientation, gas is also gaining momentum. Nigeria LNG’s Train 7, backed by TotalEnergies, was approved and signed at the end of 2019. Limited to engineering during the pandemic in 2020, the project’s construction work has now been ramped up. Sangster notes: “Nigeria is well underway to moving from being an oil country to a gas country.”
In 2020, the company produced 540,000 BOE per day from Nigeria, roughly two-thirds oil and one-third gas. TotalEnergies will continue to develop gas reserves to feed the LNG plant, the capacity of which Sangster predicts will go up 35% to 30m tonnes per annum.
While TotalEnergies wants to become a broad energy company and grow its electricity business, there is some way to go in Nigeria.
“The demand is huge for power – you can hear how many generators are running – but the power market is challenging the moment,” says Sangster. “The companies are facing severe financial issues, there is a lack of infrastructure to get the power from the power stations to the market, and regular payment by all end-users is not guaranteed.”
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Nigeria's leading industrialist is pushing ahead with his refinery, which should see mechanical completion by the end of the year. He is attending President Macron's Choose France summit at Versailles on 28 June to build new links to French industry.
Abdul Samad Rabiu, the CEO and Chairman of BUA Group, has signed several major deals with French companies in recent times, from Axens as technical partner to his new refinery, to a 300tn plasterboard factory deal with French construction giant St Gobain. He intends to list a segment of his business empire on the Lagos Stock Exchange later this year.
Herbert Wigwe, the managing director of Nigeria's Access Bank, has been working on acquiring a French banking licence. It is all part of the plan to become the 'Citibank of Africa', and help plug the gaps in the global financial architecture that have left African companies shut out of financial markets.
France's President Emmanuel Macron spent a formative period in Nigeria and is now pushing French corporates to seek opportunities beyond their comfort zone. The Choose France summit of global business leaders held at Versailles on 28 June will be noticeable for a special Nigeria event, which will bring together leading Nigerian and French industrialists. Nigeria is the only country receiving this treatment at Choose France: a sign of how important France's economic diplomacy in Nigeria is to Emmanuel Macron.
Special economic zones (SEZs) and free-trade zones were the spearhead of Asian industrialisation – allowing countries with major deficits in power, logistics and bureaucracy to pull in investors.
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