Layi Fatona is the current managing director of ND Western Limited having retired from Niger Delta Exploration & production Plc after several years of meritorious service to the company. He is a Petroleum Geologist with over thirty-five years of practice, commencing with a seven year stint in with Shell Petroleum Development Company (SPDC). Fatona is a staunch believer in the ability of indigenous minds to control the narrative of the Nigerian oil and gas industry.
In this interview with Olusola Bello, Frank Uzuegbunam and Dipo Oladehinde, he explains the challenges he encountered in building Nigeria first indigenous oil and gas firm.Excerpts:
It’s very rare for somebody who has secured Job in a place like Shell to resign and join a consultancy job. What did you see then that others were not seeing?
It looked planned but the fact that I was oblivious of the consequences of failure when I walked out of Shell made it easier to take the decision.
I was very lucky and privilege because Shell have invested so much in me and practically given me everything I needed to succeed. I think the earlier recognition of what Shell have done to me intuitively more or less push the phenomenon of living Shell. Also my wife made it a lot easier for me as well.
From consulting company you nosedive into Niger-Delta Western Limited. How did that company come about?
When I left Shell I went into consulting and I was privileged to be with very knowledgeable professionals and sophisticated experts and principal owners at Geotrex Systems Limited who were proven oil finders in the world.
At Geotrex, we built the first successful consulting Exploration and Production Company (E& P) in Africa, we were so proud of our achievement because at the peak of the company we have well over 60 young graduates. We did extraordinarily well for IOC’s so when thought as to what next came about we were very clear on the vision. We wanted to create Nigeria’s first oil company that is not owned by Army generals or Bankers. We just wanted a successful oil company that can be taken to compare with anyone in the world; we had a collection of people of diverse personality which was an awesome team. We were driven by our passion for what we wanted to achieve which led to the creation of a good Nigerian oil company.
How did you secure the fields or assets you are currently operating on?
In the late 1980’s we knew Nigeria had many small discovered oil and gas fields about 360 of them which nobody was doing anything about. Those fields were own by the major IOC’s, so we knew that the only way is to seek a means were those big oil companies can allow local entities like ours to have access to those fields which automatically remove the exploration risks.
The idea was very common in United States but not very common in Europe. So we had to approach American companies because we feel they were most likely going to listen and have engagements with us more than European companies. So we selected Chevron, then Gulf ,Texaco and Mobil. But we did recognize that Chevron or Gulf companies have varieties of land swamp or offshore assets of that category. So it made common sense for us to start from terrain where we could handle which in this case was land. So Chevron was the easy target that we recognize. Chevron told us it was a good idea but it has never been done in this country, and there is no law that allows them to do it, so they asked us to get the express permission of the regulatory authorities. We went back to Nigeria National Petroleum Corporation (NNPC), National Petroleum Investment Management Services (NAPIMS) and Department of Petroleum Resources (DPR) which took a very long time to get their consent.
Over the next one and the half years we got the approval of appropriate regulatory agencies that allow Chevron to start a conversation with us thereafter we negotiated an Non Disclosure Agreement (NDA) which allow Gulf to share information under very strict confidentiality terms. It took almost another 2 years to negotiate a two page NDA because these things have never been done before.
After series of negotiations Chevron actually offered us 12 Marginal fields we then decided that 12 marginal fields was a lot because we actually applied for one. I was very suspicious of the 12 fields because I felt it might be a Greek gift. So I suggested to my team we pick the best two and returned the remaining 10 fields back to them. It was a very naïve decision but I think I was being driven by the fact that between us and Chevron we have built mutual trust and respect.
How did you fund the fields?
Then we didn’t have money to develop the two fields at the same time so we decided to focus and develop just one of them; am happy to announce that we have actually started developing the second field now. We just spotted the oil well few weeks ago. So you can imagine the time space between then and now.
To raise money we literally went to the street begging for funds because we really felt the only way we could build a Nigeria company was to extend the ownership to a very wide shareholders. Today, there are about 1700 shareholders in the Niger Delta Western. The largest shareholder is Africa Capital alliance who owns just 15.6 percent.
Tell us the various phases you went through to form a formidable oil and gas company?
The most important thing we needed to put in place was finding a team. In the early 1990’s Nigeria petroleum sector was already very mature. There was availability of well trained professional so we had a very small and excellent technical team that came from Geotrex.
So we knew where to find people. This was one big challenge we were fortunate enough we got right. We also had a very formidable board of the company which supported the management tremendously well.
In the history of Niger Delta we just had three boards. We had an incredible board that allowed and supported the management. So the trust and respect of the technical management team from the board and shareholders was excellent.
Internally, we were also very financially discipline and very prudent too. We were also lucky to have a team of extremely very young people that are professionals in their own right.
We also had very difficult times because finding money was difficult. This is because nobody believe that Nigeria was good investment destination. Over many years we raised $6million from everybody and not in one go but pay as you go.
At the time we wanted to drill our first well no bank would give us money except the then Intercontinental Bank under Erastus Akingbola who gave us a $6 million loan at an interest rate of 27 percent in Naira term which was enough to wipe out the company, however we took the chance paid all our loans in one year, oil price also increased from $18 to $52.
How did you navigate your ways through the Niger delta in those days of Militancy in terms operations?
First you must recognise that we are Nigerians with some native intelligence, as a company , a little bit of native intelligence has helped our survival.
We knew that the problem that was tearing of the Niger – Delta apart was for one fundamental thing that the people from whose back yard oil is extracted from their background are not members of the business. For us it makes common sense for us to figure out that, that their anger was because they feel they are not part of the business. We needed to look for ways on how to make them be part of our business. We knew they had no money or technology or employable skills which was why we created a Niger- Delta host Communities Development Trust. We pledge 15 percent of which 5 percent would be given to them as profit. This are communities that the local government don’t even recognise their existence. That host communities development philosophy have demonstrated our cleanness of heart and commitment to support communities we are operating in till today. Since 2005 when we started oil production we have not had one day of host communities shut down, till today.
You now operate in midstream through the construction of your modular refinery which can now refine beyond 10,000bpd, so we can’t call it modular refinery anymore. Can you share more information about the refinery or other phases of your project?
The refinery is almost ready to go. Seven years ago we built a 1,000 capacity refinery and we started upgrading the refinery roughly two and the half years ago so the total capacity of the refinery is going from 1,000bpd to 11,000bpd. Our expectations is that it will be up and running anytime in August this year if we got the permission of DPR to introduce crude into the facility after their expectations which will take two week.
When the refinery is commission we will be producing Diesel, Marine Diesel, Jet fuel, Heavy Fuel Oil (HFO)and PMS. So in effect there will be no rejection to what we are converting the crude to.
Once the refinery is commissioned, you will be seeing less of me in the company because it’s my last show. As for ND Western, it’s a smaller company which we use to purchase one of the assets Shell divested.
In addition to the refinery we have also built a gas plant. We are the first indigenous company that eliminated gas flaring from our daily production. The gas plant can process all the associated and non-associated gas that we produce and put in a pipeline that goes to Bonny LNLG. Today, we are the only indigenous company that is delivering gas to Bonny LNLG.
Where do you intend to sell your products and where do you see yourself playing with the coming of Dangote refinery?
The products are gone already. Today Nigeria, imports $30 billion worth of refine products every year which was revealed by the Bureau of Public Enterprise (BPE). It doesn’t matter what we produce I can assure you we can never be in short of demand. Our products don’t come to Lagos it disappears to the eastern part of Nigeria. Roughly about 20 to 24 million litres of our products disappear into local economy of south eastern states legitimately; everything we produce is just import substitution. We are certainly not in any competition with Dangote refinery, because the market is too large for Dangote alone to operating in, so we not under any threat or in any competition at all.
Tell us more about your Jet A4?
Our refinery have been built in such a way that about 20 percent of our daily production of 11,000 bpd will be Jet A4. This is will be the first time that category of fuel will be produce locally. We have taken all the prequisite and all the pre conditions necessary to ensure that this category of product would be world best standard.
What lesson will you pass to the up and coming young ones in the petroleum industry?
My message to young people is to be more creative, believe in themselves that they can do something and work more with teams.
What is your advice for government so that the industry can pick up again?
In 2019, am very worried Nigeria has no plan for Energy independence, Nigeria has to be energy independence. This present syndrome of producing crude, exporting only to import refine product back just has to stop. We need a deliberate policy on energy independence.
Nigeria has no business importing crude they have to just shut their eyes completely to the phenomenon of fuel importation.
