Layiwola Fatona, 50 Years On, Now the ‘Godfather’ of the African Petroleum Industry - Africa’s premier report on the oil, gas and energy landscape.

Layiwola Fatona, 50 Years On, Now the ‘Godfather’ of the African Petroleum Industry

…And An Unusual Kind of Beneficial Owner

By the Editorial Board of Africa Oil+Gas Report

A roar of applause, by over 4,000 attendees, rent the air in the state house banquet hall in Abuja, one evening in late February 2024.

Layi Fatona, founding Managing Director of  Aradel Holdings, was receiving the Icon of the Industry award at the Gala Night on the opening day of the Nigeria International Energy Summit (NIES).

In the five months since that event, Fatona has starred in a season of honours, featuring one celebration after the other, of his lifelong achievements as a man whose career most symbolises the growth of African indigenous E&P companies into functioning, thriving, sometimes integrated, entities.

For a Quarter Century, His Name Was Synonymous…”Fatona exercised such influence that many people replaced the name of the company with his name. Often, you heard people say “Dr. Fatona is also not interested”, instead of saying: “NDPR is also not interested”. His name was synonymous with the company’s.”

The invitation card to a dinner in his honour at the Metropolitan Club in Lagos last week asked the select guests to “join us in a warm evening of salutation to the foremost value driver in our industry”. The gold-plated card was signed by Austin Avuru, the founding Chief Executive of Seplat Energy.

Fatona joined Shell in 1974, a year after he graduated with a Bachelor of Science degree in Geology from the University of Ibadan.

It was a pivotal period to be a part of the Nigerian petroleum industry.

It was 14 years after Shell hired Ben Osuno, its first Nigerian geoscientist, who went ahead to become the director of the Department of Petroleum Resources. More tellingly, it was three years after the creation of the Nigerian National Oil Corporation (NNOC) and three years before the emergence of the NNPC from the merger of the NNOC with the Federal Ministry of Petroleum and Energy Resources.

“The idea to form an E&P company, to which a large pool of Nigerians subscribed as shareholders, began to gain traction in the early 1990s”, Fatona once told our reporters in a book-lined office in his house in Magodo, a middle-class suburb in the north of Lagos. That inclination took a firm hold after the Nigerian government, in 1991, doled out concessionary awards to a select number of Nigerian businessmen, who, the government claimed, “had excelled in other areas of economic activity.”

At about the same time, the first generation of Nigerians who had served at the highest levels in multinational companies were coming out in retirement. “Whereas Nigeria had produced oil and gas all these years, there was no single publicly owned, publicly held, oil-producing company owned entirely by its nationals,”Fatona explained.

On secondment from Geotrex, a geoscience consulting company where he worked after leaving Shell, Fatona joined the team led by Aret Adams, the very influential former group managing director of the NNPC, which incorporated the Midas Drilling Fund in 1992, to fulfill a long-term desire to create a Nigerian independent led by Petroleum professionals with competencies honed by years of vast technical experience in the industry. The company was renamed Niger Delta Petroleum Resources (NDPR) Limited in November 1996.

NDPR negotiated the farm out of two marginal fields with Chevron before the Nigerian government opened the floodgates to applications for marginal fields. NDPR started production in 2005, officially becoming the first formally designated Nigerian producer of a marginal field. It was joined two years later by Platform Petroleum (Umutu field, now Egbaoma field) in 2007.

Between 2010 and 2013, marginal field operators were spearheading the creation of mid-sized Nigerian independents acquiring full acreages. Platform had partnered with other companies to create a vehicle named Seplat, which acquired three Shell operated acreages: Oil Mining Leases (OMLs) 4, 38 & 41 in 2010; NDPR had created an SPV named ND Western from partnerships with Petrolin, First E&P and Waltersmith, to acquire Shell operated OML 34 in 2012; Afren spun off a company called First Hydrocarbon Nigeria (FHN), which acquired Shell & Co’s stake in OML 26; Shoreline Power collaborated with London based Heritage to acquire OML 30; Eland Oil& Gas partnered with Nigerian owned Stacrest, creating a vehicle named Elcrest, to acquire OML 40, which then (in 2012) had no production  and Ernest Azudiallu’s Nestoil spearheaded a group named Neconde, to acquire OML 42.

In those three years, NDPR, apart from its majority stake in ND Western, built a modular crude oil refinery and commissioned a 100Million standard cubic feet per day (100MMscf/d) gas processing plant, thus becoming an integrated player, at once  exporting crude, processing natural gas and (at the beginning), producing diesel, all on the back of a field that was evaluated as having only 5Million Barrels (Stock Tank Oil Initially In Place , STOIIP) at the time of farm out.

It is fitting to say that Fatona was at the centre of it all and you could trace the trajectory of the ‘modern’ evolution of the Nigerian independent, a species which now controls around 40% of Non NNPC led production of Nigerian hydrocarbons, from NDPR’s acquisition of Ogbele field from Chevron in 2000, to Heirs Holdings’ takeover of operatorship of former Shell operated OML 17 in 2021.

Why is this important?

The Nigerian E&P independent  is a unique species in the Global hydrocarbon patch. There are less than five of such companies (homegrown upstream oil firms created by locals) in any of the hydrocarbon producing jurisdictions in Africa:  Algeria, Angola, Congo, Cote D’Ivoire, Egypt, Equatorial Guinea, Gabon, Ghana, Libya, Mozambique, South Sudan, Sudan Tanzania and Tunisia. None of the largest indigenous companies in these countries, neither Angola’s Etu Energias, nor Egypt’s Pico-Cheiron, produces, on a net basis, anywhere close to 15,000BOPD. And even on the famous London Stock Exchange, non-Major E&P firms with assets the size of any of the top seven Nigerian independents, are rare.

THROUGHOUT HIS 25 YEARS OF STEWARDSHIP AS THE CEO of the company now known as Aradel Holdings, which is the holder and operator of the Ogbele Field (2023 production: Oil: 9,700BOPD Gas: 26.5MMscf/d), Omerelu Field (now on extended well test, preparatory to start of production), the Oil Prospecting Lease (OPL) 227 (non-producing) and 42% owner of ND Western, which is itself a 45% owner and co-operating partner of the Oil Mining Lease (OML) 34 (2023 gross production: Oil: 13,000BOPD, Gas:262MMscf/d ), Fatona exercised such influence that many people replaced the name of the company with his name.

Often, you heard people say “Dr. Fatona is also not interested”, instead of saying: “NDPR is also not interested”. His name was synonymous with the company’s.

Three years after he left the job, he still wields influence. As the Vice Chairman of ND Western, an apparently non-executive position, he was the point man in directing the company’s bid for acquisition of all the shares of Shell Petroleum Development Company (SPDC), a deal which, if successful, will hand over Shell Nigeria’s control of 18 onshore and shallow water OMLs, to Renaissance Africa, a consortium which was initiated by ND Western and includes five partners: Petrolin, ND Western, Waltersmith, First E&P and Aradel.

And yet Fatona may not be, technically speaking, a Beneficial Owner of Aradel Holdings, if we go by the very first sentence in the regulator’s legal, published, definition of a “Beneficial Owner” of an upstream Oil & Gas acreage.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) defines a Beneficial Owner (BO) of upstream oil and gas assets, as “persons with significant control” over such assets.

For NUPRC, a ‘person with significant control’ Is one who ”directly or indirectly holds at least 5% of the shares or interest in a relevant person; directly or indirectly holding at least 5% of the voting rights in a relevant person; directly or indirectly holding the right to appoint or remove a majority of the directors or partners in a relevant person; otherwise having the right to exercise or actually exercising significant influence or control over a relevant person; or having the right to exercise, or actually exercising significant influence or control over the activities of a trust or firm, whether or not it is a legal entity, but would itself satisfy any of the first four conditions above if it were an individual”.

In November 2023, Africa Oil+Gas Report asked Dr. Fatona a simple question: How much of the overall equity of Aradel Holdings do you own?

His response: “My entire extended ‘household’ – direct or indirect holdings and these include relatives by name on our last count is somewhere in the range of 4-4.5%”.

Now that is quite unusual figure for a Co- Founder/Chief Executive in a (relatively) large Nigerian oil and gas asset.

Fatona ran Aradel for a quarter of a century and had a leeway to ensure he controlled significant shareholdings. He chose not to.

“I know other relations by name and without any reference or deference to me, have from time to time cashed in on value accretion, some of their small holdings. I often receive their thanks and prayers when such happens”, he added.

But why does he hold so little, compared with his peers?

“I have often shared this fact but no one listens”, he explained. “We created ND for Nigerians Today, we have nearly 2,000 shareholders”.

That, for us, is the mark of selflessness, a measure of true grit.

Happy 75th Birthday from all of us at Africa Oil+Gas Report. Happy celebration of 50 Years of a truly inspiring career.

And, can we say, happy retirement?

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