Aiteo Group and Seplat lead indigenous Nigerian groundswell

A great change is occurring in at the grassroots of the oil and gas sector in Nigeria. For most of our country's history as a petro-state, the International Oil Companies have called the shots, dominating the exploration and production of oil products. But now, indigenous companies are beginning to develop the capacity to compete with the IOCs, seizing back control and fortifying a groundswell of local content.

Let's start with the history: when we think of the Nigerian oil sector, much in the same way that when we think of the oil sector anywhere, the names that come to mind are ExxonMobil, Chevron, Total, and Shell. In Nigeria, as across the world, these are some of the IOCs that routinely partner with, and benefit from, the Nigerian National Petroleum Corporation (NNPC). These are the companies that are given the opportunity to dive into the exploration and production of oil from some of the largest fields in the Niger Delta, some of which have the capacity to produce several hundred thousand barrels of oil daily.

The size of the IOCs production infrastructure and the reach of their distribution networks has long seen them favoured in the allocation of oil mining licences (OMLs). They are preferred over smaller firms for the sake of ease, as much as anything, and in the hope of a job well done.

But the status-quo has shifted and with it, the dynamics of Nigeria's oil and gas sector are fast changing. Indigenous players are gearing up to grapple for control of Nigeria's upstream oil and gas industry from the majors that have dominated it for so long.

But why the change of heart? Why are the indigenous players even being considered in the same breath as the IOCs? The proof, as they say in the UK, is in the pudding. Over the past 5 years or so, the local content providers have proved their ability by ramping up production capacity on the oil blocks to which they were given licence. Rather than being greedy and failing, they have consolidated the areas gently and slowly and, in doing so, have made serious gains on their IOCs counterparts in terms of technical expertise and finance capability.


Per industry analysts, the indigenous companies breaking new ground include Seplat, Oando Plc, Nestoil, Newcross Petroleum Limited, but it is the integrated company Aiteo Group, run by the reclusive businessman Benedict Peters, that experts say is truly leading the charge. Industry pundits in Nigeria and wider international commentary platforms are keeping a close eye on Aiteo Group. After a strong run of results in 2017 YTD, the plucky local firm is even being tipped as one of the major players in the industry going by its antecedents.

Aiteo Group discovers, produces, stores and delivers energy resources to marketplaces worldwide, and is currently working on developing energy resources in some of the world's most significant basins. In 2015, Aiteo was awarded the majority share in OML 29 after Shell put it up for tender and, in the last 12 months, has tripled production at the onshore site, reaching the heady heights of 90,000 barrels per day by March.

Elsewhere in the indigenous sector, Seplat Petroleum Development Company Plc isn't far behind Aiteo, with production topping out at 50,000 bpd of crude oil YTD. Seplat are also currently supporting government on completion of the Amukpe to the Escravos pipeline which could spell favourable treatment in years to come.

So what's the secret? It looks as though indigenous operators have been able to raise capital in a very effective fashion, allowing the acquisition of apparently marginal assets from IOCs. Once secured, the effective deployment of human and infrastructure capital has seen the indigenous firms either maintain, or exceed, inherited production levels. An even greater feat when once considers the grim picture that usually comes with a downturn in the oil markets.

With indigenous firms accounting for approximately 12 per cent of Nigeria's 1.8million bpd total oil production, there is still a long way to go before the IOCs will be forced to address anything in-country. But it is encouraging to see the progress being made and the rewards being delivered to Nigeria. Further confirmation of our inherent entrepreneurial spirit, as if any more was needed!


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