In 2 To 3 Years Gazillionaires Will Be Coming Out Of Africa

In 2 To 3 Years Gazillionaires Will Be Coming Out Of Africa
Kola Karim

AFRICANGLOBE – With the swagger of a new generation, Shoreline swept up former Shell assets in 2012 to join the vanguard of nigeria’s indigenous upstream revolution. Kola Karim, Group Managing Director and Chief Executive Officer of Shoreline Energy International spoke to reporters in a recent interview.

How are things changing in the oil sector with regard to the financing of projects?

Kola Karim: What is happening today is we’ve now got a commanding position as African corporates because of the paradigm shift in capital – the pool of capital is shifting. African banks and financial institutions can write cheques now. I can sit down and say: “GTBank, write me a cheque of $350m,” done!

Shell and Chevron are getting out of onshore operations. How big is this and where is it leading?

These guys are just restructuring. Let me tell you something, they’re just ripping people off as well, but the reality is it’s an opportunity. There’s a great opportunity for people like us to build humongous companies in a short time. You will never find these opportunities again. It happened in Russia. Mark my words, in two to three years you’ll see gazillionaires coming out of a place called Africa from the world of business.

I’ll give you a typical example so you can follow this analogy well. Shell has about 36 onshore licences in Nigeria. Now, if you look at the history of the Niger Delta problems, these guys had to shrink their operations or stop working in a lot of places because of these problems, then 12 years ago they went deep offshore.

Shell was producing about 1m barrels a day [bpd] from all these onshore/shallow water licences. Then they went deep offshore, and in one field called Bonga they knocked 250,000 barrels a day! So someone in The Hague is thinking ‘Hang on, why do I go through all this mess for 36 assets – some producing 3,000, 5,000, 15,000 [bpd] – if I can consolidate my position, go deep offshore where the guys from the Delta can’t reach me easily?’

So perhaps in about 10 years there won’t be any foreign companies operating onshore?

I don’t think in 10 years, I give it five.

How do you compare in size with other local operators such as Oando?

Oando’s not very big – there’s no one as big as we are today in exploration and production. In Nigeria, there are marginal field operators who are producing 2,000- 5,000 bpd. People like us, today we’re producing 44,000 bpd! So the game has changed. We’re just doing our numbers. This year alone we should do about 4.5-5m barrels – that’s a local company, and the game is changing! But what have we done better than SPDC [Shell Petroleum Development Company] or Shell? Simple, it’s to interface with the local community. It’s not easy, don’t get me wrong.

They don’t see you as a big Lagos boy who’s coming down to throw his weight about?

No, not at all. Which side of the divide do you want to sit? We’ve said that we want to sit on the side of the people because if you sit on their side and work them well, you’ll achieve what you want to achieve. I’ve gone to ground zero to make sure our engagement is with every community. I’ll give you an example. There is a pump station that’s been closed for seven years. Shell called me and said how the hell did you get it opened? It’s pumping 4,800 barrels today.

How’s it going with your partner Heritage oil? Are you able to pull some of its technical knowhow into your own company?

Oh, big time! The most senior director [of the joint venture] – Steve Kobak – is from Heritage. All the 22 engineers underneath him are Nigerians who are learning from him. We’ve got some in the United Kingdom back and forth. Because you see, for me, my focus is: learn, build a formidable, nimble African company.

 

By: Nicholas Norbrook