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The Two Extra Hours That Made Amenam

Section: Kickstarter · August 16, 2026 · No comments |

By Toyin Akinosho

How a stuck drill bit and a departed boss handed Daniel Ndefo the biggest discovery of his career

When the technical manager rushed for his flight out of Lagos that Friday afternoon, he left one instruction with Daniel Ndefo: stop the well at 6pm. Everyone else — Ndefo’s boss, the managing director — was already gone on summer break. The well, offshore in 40 metres of water, had been drilling through nearly 1,000 metres of shale where the geologists had expected sand. Rival drillers were phoning to mock them. “Are you a shale company now?” Ndefo recalls being asked.

He let the rig drill on.

“There’s no difference between 6pm and 9pm,” Ndefo, now 80, told me, recounting the decision that would define his 30-year career at Elf — the company that became TotalEnergies. He radioed the rig to keep going until the bit was dulled. Within the hour, the drillers broke into coarse sand and gravel, with the fluorescence and gas readings that signal oil. The bit stuck; mud began to leak away. But the discovery was made.

That encounter birthed the Amenam field, a hydrocarbon accumulation Ndefo puts at more than 500Million barrels (of recoverable crude oil reserves). The discovery lifted Elf’s Nigerian production life from a precarious five years to 30 or 40, and was celebrated across the company worldwide. “At that depth and pressure, it was something new,” he said. The top reservoir sat below 3,500 metres and, unusually, was hydrostatic rather than overpressured.

The near-miss quality of it is what stays with him. Had he obeyed the 6pm order, “Amenam would still be there” — undiscovered. It is a lesson he now presses on the operators of Nigeria’s marginal fields: don’t write off the small or the stuck. “There might be many more wells that were abandoned because they were not seeing what they expected.”

Ndefo belongs to Nigeria’s founding generation of petroleum geologists. He entered the University of Nigeria, Nsukka, in 1966 — diverted there from Ibadan by the looming civil war — lost three years to the war itself, and graduated in 1973. His class was among the country’s very first National Youth Service Corps (NYSC) cohort, the “pioneers,” and he joined SAFRAP (later Elf) straight from the classroom to the well site, spending his entire first year on the rig on his recruiting boss’s advice: “Forget about money, go and get as much knowledge as you can.”

LET’S GO TO CLASS

Look hard at the Niger Delta map and what you see is not a basin of a few giants but an accumulation of small structures that add up. More to the point: some of those “failures” failed only because the crew wasn’t seeing what it expected, and stopped. Wells are sometimes declared as dry, even though the total depth is a few metres above the horizon they were targeting. A metre of oil on a log is not a verdict — it may be a fault cut, with twenty or thirty metres waiting on the other side. Check it. Work the analysis before you write it off.

By the turn of the 1980s, exploration at Elf Nigeria was running on borrowed time. The company’s proven production life had contracted to roughly five years. Obagi field carried the portfolio — a rollover that its reservoir engineers kept alive by chasing thinner and thinner sands — but the acreage behind it was lean, and everyone in the building knew it. “Before Amenam we were like an endangered species,” Daniel Ndefo says of the explorationists of that era. Production was safe. Administration was safe. Exploration, with nothing on the horizon to drill, was not.

Amenam field being interpreted on a workstation many years after its historic discovery

The search for new, prospective Nigerian acreage was so crucial for headquarters that Elf dispatched a geoscientist to run its affairs in the country, his primary assignment being to win more blocks from the government. Almost every morning the managing director would show up for updates with Ndefo’s boss. “We went to the Anambra basin, and we saw that any discovery in the Anambra basin, which is Cretaceous, would not solve our problem. If we made a good discovery there you’d have to run a long pipeline to the ocean, and that won’t be economical.

“The government said they would encourage any company that was ready to do exploration. We said, we were ready. They gave us some offshore blocks, western offshore, near Chevron. We drilled 5 wells there. They were all gas, gas discoveries. What were we going to do with gas?

When Shehu Shagari became the president (1979) we went to him. He said we must show we were ready. We said ‘sure, we can do some investigation even in your own state’. When he insisted that we should start something, we said the first thing we had to do was to find the depth of the basement, so that we’d know at least the thickness of the basin. We had to shoot 500 line kilometres of 2D (two dimensional) seismic survey in order to determine the depth of the basement.

“And we saw something all right, that the basement was dipping towards Niger Republic, it’s shallower on Nigerian side. But towards the Republic of Niger you have thicker sediments, and of course you know what that means. If you needed to do something serious it had to be in Niger. But we saw something also, that there’s a lot of phosphates deposit. There are a lot of phosphates around the Sokoto basin”.

Elf Petroleum was eventually granted four prospecting blocks in the southeast offshore (shallow water) Niger Delta in 1985.

Amenam happened in 1990.

NDEFO TELLS THE STORY THE WAY explorationists tell the wells that mattered: not as a triumph delivered on schedule, but as a run of judgement calls made under pressure, with incomplete data and a boss’s stop-order ticking down. It is worth retelling here precisely because so little of it went to plan.

Building the picture

The groundwork was unglamorous and, in Ndefo’s telling, decisive. Part of his brief in those years was to scout and swap well data across the Niger Delta — you traded a well, you got its coordinates, a couple of strike lines and a couple of dip lines, the samples, and the logs that mattered: porosity, gamma-ray. He gathered them and plotted them, patiently, until a fabric started to show through the map. Faults, discoveries, gas — a pattern in how the Delta was put together.

So when the shallow-offshore acreages were handed to the company, Elf did not go in blind. The team had the regional read to know roughly what sat where. What they also had, on 2D, was Amenam: an unmistakable closure, but a worrying one. The structure came in below 3,500 metres. Stack the sands and you were looking at something close to 300 metres of reservoir. Big. And, at that depth, frightening. “We knew it was there,” Ndefo says, “but we were saying, even if we go for this, it might be gas — and if it is gas, it’s useless.” Gas, in that market, solved nothing.

So they did the disciplined thing and drilled the smaller prize first. Ofon went down, proved it could produce, and put cashflow and confidence behind the department. Only then, with money and nerve in hand, did they turn to the giant they had been circling.

Reading the character

Here is where the discovery earns its reputation as a happy accident — though “accident” undersells the interpretation behind it. In 40 metres of water, drilling their first well in that setting, the team was working from seismic character alone. No 3D. No pre-stack inversion sitting on a workstation to tell them sand from shale before the bit arrived. They looked at a reflection and argued about it. This event could be shale. Then what is the thing beneath it, with the different character — could that be sand? And if it is sand, under a closure this size, it could be a wonderful thing.

They committed to that reading and drilled. And for a long while the well made them look foolish. What they had hoped would come in as an alternation of sand and shale came in as shale — close to a thousand metres of it. The mockery started, as it always does. Drillers rang him up: “Dan, are you a shale company now?” In exploration, Ndefo notes drily, a dry well leaves you with no friends. But the target was that mapped top, that character change — and the shale, stubbornly, kept going.

Two quieter decisions were carrying real weight underneath the drama. The team had already been raising mud weight on the way down, spooked by thin sands they’d cut higher in the section, so they were drilling heavier than a routine well of that depth would demand — a hedge against the unexpected. And Amenam, unusually, would turn out to be hydrostatic rather than overpressured, which is part of what made it a technical talking point long after. Neither fact felt like destiny at the time. Both mattered enormously within the hour.

The two hours nobody authorised

It was August — the season the bosses take their summer leave, and hand the keys to whoever is standing there. Ndefo’s own boss had already gone. The technical manager, second to the MD, stayed on for the well and was meant to see it stopped that Friday evening. Then the airport called: come now, or lose your seat. “Dan, it’s in your hand now,” he said on his way out the door. “When it is time, you radio the rig to stop.” The instruction was clean: 6pm, and no further.

Six o’clock came. Ndefo did not stop the well. He and the geophysicists — he names the late Mike among them — had convinced themselves they were close to a drilling break, and they wanted to see the reflection they had staked the well on. “There’s no difference between 6pm and 9pm,” he reasoned. There was a bit on bottom; why not drill it until it was dulled? Everyone senior was airborne or unreachable. The call was his alone, and he made it: give it two more hours. If nothing shows, nothing shows.

He had gone home — three buildings away — for a drink and a breather when the shout came. Come, they’re calling you from the rig. This was before measurement-while-drilling gave you the formation as you cut it; the picture arrived on a lag, two hours of it at that depth, so for a while all they could do was sit in the office and wonder what was down there. What they knew immediately was that something had changed. There had been a break — fast drilling, the bit dropping through — and, with it, mud losses. Not total losses, but enough that the bottom-hole assembly took weight and stuck. They could no longer pull up, no longer drill ahead. They could still circulate.

Then the lag caught up. Coarse sands — almost gravel. Fluorescence, the first thing the wellsite man calls in. And the gas chromatograph lighting up C1, C2, C3, C4 in the sequence that tells you oil is present, not merely gas. The break had made perhaps five metres, fifteen feet, before it stuck — enough. Amenam was real.

Salvaging the well on a Friday night

A discovery you cannot get back into is only half a discovery, and the assembly was stuck. The plan came together fast: cut off the bottom-hole assembly, plug back to a chosen depth, and sidetrack — a job the team costed on the spot at around two million dollars. That kind of money needs a signature, and it was Friday evening.

With his own management gone, Ndefo worked the phones and the maps. He reached his boss, got a “whatever you can do, do,” and drove to the regulator, where the DPR always kept someone on. He laid it out for the officer on duty — the maps, the earlier logs, the drilling-rate curve, the seismic showing exactly where a clean sand under a chaotic shale should sit, and where it now clearly did. The man, by Ndefo’s account, was almost certainly not the designated authority for a call like that. He made it anyway. “Since you people — since this discovery — go ahead,” he said, with the formal review to follow on Monday. It was the go-ahead the well needed to be saved.

What it meant, and what it should still teach

Amenam, later unitised with Mobil’s Nkpono- after a hard argument over operatorship that Elf came out of holding the majority and the operator’s seat — pushed the company’s production life from five years to thirty or forty. It was celebrated across Elf worldwide, and not only for its size: a discovery at that depth, hydrostatic rather than overpressured, was genuinely new ground. By the time it was developed, Ndefo had retired, and it came onstream into a strong price — the payoff arriving, as these things often do, long after the anxiety that earned it.

He draws a working lesson from it, and it is aimed squarely at the people now holding marginal fields. The industry likes to say the elephants have all been shot. Look hard at the Niger Delta map, Ndefo argues, and what you see is not a basin of a few giants but an accumulation of small structures that add up. More to the point: some of those “failures” failed only because the crew wasn’t seeing what it expected, and stopped. Wells are sometimes declared as dry, even though the total depth is a few metres above the horizon they were drilled for. A metre of oil on a log is not a verdict — it may be a fault cut, with twenty or thirty metres waiting on the other side. Check it. Work the analysis before you write it off.

And with modern kit — rigs and stacks rated far beyond the 5,000 to 10,000 PSI ceilings his generation drilled to, MWD (Measurement While Drilling tool) showing you the formation in real time where he once ran shale density by hand in a graduated bottle through the night — the deeper, harder objectives that were once off-limits below the akata are reachable. In a market where gas is finally money, that changes the arithmetic on a lot of structures everyone quietly gave up on.

Ndefo says he can speak freely now — at 80, he likes to remind you, nobody can slap him. What he chooses to speak about, given the freedom, is Amenam. “Whenever I remember it,” he says, “I say: good.” Squeeze the timeline of that Friday down to a single hour — between six and seven — and it is plain how close it ran. Obey the stop-order, accept the disappointment of a thousand metres of shale, and the field is still down there, undrilled. “Amenam would still be there.” The reservoir did not move. The willingness to drill two more hours is what found it.

By the late 1970s the company was desperate for acreage. Elf’s reserves were thin, and Ndefo describes basin studies that took his team by Land Rover across the Benue valley to Yola and Jos, and 2D seismic shot as far as the Sokoto basin — where they found the basement dipping away toward Niger, and phosphate deposits, but no answer to Elf’s problem.

Under President Ibrahim Babangida (1985) the company finally won shallow-offshore blocks, and it was in evaluating that acreage that Amenam eventually emerged.

Much advanced tools came later: here’s a 3D rendering of a top Structure Map in the Amenam field, showing the associated fault framework and penetrated wells

He is candid about the frustrations, chief among them the cash-call crisis under (then head of state) Sani Abacha, when government routinely failed to fund its share. “I can say this confidently — at 80, nobody can slap me,” he laughed, recalling IOC chiefs gathered in Abuja whom the military ruler would refuse to meet. The workaround, he says, was sole risk: the operator funded the drilling and recovered its costs from equity crude if oil was found.

On the industry’s future, Ndefo is unmoved by the repeated announcement of the death of oil. He recalls telling one IOC chief executive that the majors publicly retreating from Nigerian oil are acquiring acreages and making discoveries elsewhere. “There’s no way people will not need oil and gas,” he said, pointing to petrochemicals, and to unexplored frontiers — the Benue trough, the deep offshore — that he believes still hold prizes.

For a man who chose geology out of a schoolboy’s love of nature, kindled by a Canadian geography teacher at Government College, Umuahia, it has been a life fully lived in the field. “There’s nothing that gave me excitement like going to the field.”

Cote d’Ivoire Poised for a Return After A 20 Year Freeze

Section: Kickstarter · September 9, 2024 · No comments |

By Toyin Akinosho

I arrived Félix-Houphouët-Boigny International Airport at 3am, in the morning, looking forward to seeing the lay of the land in the next several days and talking to a number of people about the looming hydrocarbon boom.

It had been 24 years since my last visit.

This early May 2024 trip had been prompted by reports-and their aftermath- of three discoveries of hydrocarbon accumulations, estimated at over 7Billion barrels of crude oil and gas equivalent in place in water depths ranging from 1,200 to 2,700 metres.

Nowhere else has this scale of discovery happened in Africa in the last 10 years than in Namibia, which now hosts the largest constellation of hydrocarbon super majors on the planet.

In the late 1990s, Cote d’Ivoire promised the world it would be a hub of oil and gas activity in the medium term.

It didn’t happen.

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I’d once constructed a theory, in my head, that the capital city of an African country that has recently stumbled on large oil and gas deposits would look a certain way. But I have always been disappointed. I was disappointed by the dourness of the Accra scene when I visited Ghana in 2008, a year after the couple of fields that were eventually collectively christened ‘Jubilee’ was discovered. Less than two weeks before this trip to Abidjan, I was in Windhoek, Namibia, a place whose midday pace of activity, even at main street level, was underwhelming.

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I finally located the headquarters of (the state hydrocarbon company) Petroci, not in a swank, posh corner of the city, but in the busy downtown. It’s the same downtown area that hosts the headquarters of the African Development Bank, but it doesn’t look anywhere as bespoke as the headquarters of Ghana National Petroleum Corporation in Tema, NNPC Towers in Abuja, Sonangol’s headquarters in Luanda, or even PetroSA’s head office building in Cape Town.

Read the full story here…

Hits & Misses; Independents in the Age of The Small

Section: Kickstarter · August 4, 2024 · No comments |

By Toyin Akinosho

Nationalism and ‘pretenses of nationalism’ ensured the failure of asset acquisitions by three ambitious independents in Chad, Cameroon, Gabon and Nigeria between 2021 and 2024.

The most recent case was in Gabon, where a new government, taking power in the midst of the approval process for Maurel et Prom (M&P)’s purchase of Carlyle backed Assala Energy’s assets, chose to scuttle the deal and hand the property over to Gabon Oil Company, the state hydrocarbon firm. If the transaction had succeeded, as signed, M&P’s net output in its entire portfolio would have soared by 160% to 72,000Barrels of Oil Equivalent Per Day (BOEPD).

While the Paris listed M&P walked quietly away, preferring not to argue with the state, UK based Savannah Energy chose to stand firm against Chadian authorities over the latter’s nationalization of the assets it purchased from Exxon-Mobil. The size of the pie is considered significant to Savannah: a net crude oil production of around 28,000BOPD, along with interests in the 1,200kilometre Chad-Cameroon pipeline. Savannah has taken the Chadian government to arbitration. It says in its 2023 annual report released in June 2024: “We expect the arbitral proceedings to be concluded in the second half of 2025”.

UNDER THE PRETEXT OF SAFEGUARDING NIGERIA’S ECONOMIC AND STRATEGIC interests, state hydrocarbon company NNPC, in May 2022, moved to stop Seplat Energy’s purchase of the entire share capital of the Nigerian unit of Exxon-Mobil Corporation – Mobil Producing Nigeria Unlimited (MPNU)-for a consideration of $1.28Billion. The asset is the entire offshore shallow water business of ExxonMobil in Nigeria, producing 95,000BOEPD in 2020 (92% liquids) working interest. Based on 2020 pro forma volumes for Seplat and MPNU, “the transaction would deliver 186% increase in …

Excerpted from the ‘Kickstarter’ Column in the June 2024 edition of Africa Oil+Gas Report. Access full article here.

Nigerian Oil in a Post- Diezani Trauma

Section: Kickstarter · May 19, 2022 · 1 comment |

By Toyin Akinosho,

A fuller sketch of events

In the Christmas of 2014, Nigeria had three months to go for elections.

I was living in Lagos, the country’s commercial hub, and frantically calling for the removal of Diezani Allison-Madueke as the petroleum minister.

There were numerous reasons I thought it’d be a value destroying proposition to keep Mrs. Allison-Madueke in the role, if (the incumbent President) Goodluck Jonathan won the elections. I enumerated them in this column at the time.

But close to eight years after the electoral sack of Goodluck Jonathan and the accompanying exit of Allison-Madueke, the Nigerian petroleum industry is in a far sorrier state than it was. President Muhammadu Buhari and his team have not only wasted the Nigerian energy crisis, they have encouraged the ungovernability of the space that the petroleum sector occupies, even with their much-celebrated success with the passage of the Petroleum Industry Act (PIA).

For context, I’d briefly summarise why I had forcefully called for Diezani’s ouster and then return to Buhari’s dismal performance.

The darkest spot on Diezani’s tenure was the signing and implementation of the Strategic Alliance Agreement (SAA).

She was settling down as minister in 2011 when Shell, TOTAL and ENI were rounding up the sale of their 45% in five assets onshore Niger Delta to Nigerian companies. Her ministry decided that the NNPC would be more active in management of the assets. This is fine. What’s lamentable is the way in which the country’s share of the proceeds got diluted in such a way that the net return to the national coffers was significantly diminished, in favour of the private interests that was allegedly investing in production capacity on behalf of the NNPC.

The NNPC, at the minister’s instance, nominated its operating subsidiary, Nigeria Petroleum Development Company NPDC, to manage the acreages. The NPDC in turn invited a financing partner to fund its share of the operations. The contract with Atlantic Energy (SAA) entitled it to 30% of NNPC’s share even after the cost oil had been recovered.

In order to recover its cost in funding the NPDC part of the operations, the terms called for Atlantic Energy Drilling to receive, at the beginning of production, 60% of the volume of crude oil to which NPDC (NNPC) was entitled. This is cost oil. When that cost was fully recovered, Atlantic’s share would drop to 30% of the crude oil to which NPDC was entitled. Please read this carefully; in the post-Shell operatorship phase, after the NNPC equity had been transferred to its subsidiary NPDC, to become the “operator”, with so much fanfare, NPDC had gone into an agreement with a company unknown to the industry and registered just months before the deal. The company was charged with the responsibility to fund NNPC share of the cash call for operations in return for 60% (in the first instance) and later 30% (after cost recovery) of the crude oil that should accrue to NPDC (NNPC) and by extension, the teeming Nigerian population! In effect, the rightful share of the proceeds from these assets that should flow to the National Treasury drops by at least 30%, all through the duration of the agreement.

I have gone into this simple explanation to show how inequitable the Strategic Alliance Agreement had been. What’s worse, much of the entitlement to the nation from this much reduced take never made it to the national treasury.

This brazen way of spitting in the nation’s face was the signature conduct of Diezani Allison Madueke’s tenure.

In four years on the job, she saw out three successive heads of Department of Petroleum Resources (DPR), the industry’s regulatory agency and fired four Group Managing Directors of NNPC, the state hydrocarbon company. The most important criterion for keeping any of those jobs was an undivided commitment to doing Diezani’s bidding. She had a huge appetite for pursuing vendettas, even after dismissing the non-compliant heads. Of all the acreages divested by Shell during her tenure the only one for which she got NNPC to call up its pre-emption rights was motivated by pure anger.

IOCs conducted divestments from 21 acreages under her watch, a sign of inclement investment climate more than anything else, but the minister didn’t regard it as a blot. Instead, she saw opportunities to influence the sale and purchase in her personal favour. The companies often had to watch her body language to determine who to sell to.

Diezani superintended the highest crude oil prices in history (2011 to 2014) but the Nigerian rig count trended south. The cash call issue (which is what Nigerians call the IOCs’ receivables from NNPC for joint venture operations), became more intractable than ever during her tenure. As work programmes shrank in that era of high of prices, the major companies accelerated the frequency of severance packages for their staff.

So much for memories of the Diezani era.

Buhari removed NPDC’s chokehold on Nigerian independents with assets in the Western Niger Delta, and allowed the CEO of NNPC a free hand. Key upstream operators cheered when his government proposed to pay the cash call arrears in tranches that were transparently measurable. But knowing what we know now, the gesture had come too late. Buhari himself has witnessed the divestment of seven oil mining leases by two majors and I have to quickly say this before anything else about his administration’s seven years; the impunity in acreage licencing and administration has become more rampant. The 2020 Marginal Fields Bid round was the country’s least transparent and possibly most corrupt hydrocarbon lease sale in the last 20 years. The round, superintended by the (now defunct) DPR, was so riddled with malfeasance that the newly created Nigerian Upstream Petroleum Regulatory Commission (NUPRC) cannot publish the list of awardees.

Yes, petroleum rights are where the Buhari team got it most wrong. In one case that could have been laughable if it was not so tragic, the DPR revoked the four Production Sharing Contracts operated by Sinopec-owned Addax Petroleum and, in the course of three days, re-awarded the PSCs to two Nigerian companies, one of them owned by a highly politically exposed individual. Of course, there was a lot of kicking and screaming by the state firm NNPC, the concessionaire of the PSCs and the Nigerian president instructed a return of the rights to Addax, after the Chinese government had complained, but the episode fit a pattern. In the last 18 months the Buhari administration has re-awarded at least four licences it had revoked from some companies, to other companies, all outside the process of a bid round or any form of open, transparent contest. A sense of arbitrariness is highlighted by the decision to suspend sections of the Petroleum Industry Act, because the government could not dare to remove subsidies on gasoline importation, which costs the treasury over $4Billion a year. The sense-in the air- of deepening entropy in the conduct of the affairs of the Nigerian petroleum industry has not abated.

The old habits of sitting on proposals and approvals for pecuniary gains, either at the Ministry, at the regulatory agency, or in the NNPC towers, haven’t gone away and it is largely because, despite legislated structured reforms, individuals still see themselves as the processes!

President Buhari is credited with the passage of the Petroleum Industry Act, but we must not forget that his presidency spent the longest time (six years) to work on it. Project delivery timelines haven’t improved. It is looking like none of the gas pipelines under construction by NNPC, before Buhari came in, will be completed before his eight-year term of his Presidency ends. My key worry is the unwillingness of the man once described as “ascetic, sandal-wearing general”, to tackle the glaring graft in the sector. It is why I think the country is living in the post-Diezani trauma.

This article, earlier published in the Kickstarter column of the March 2022 edition of the monthly Africa Oil+Gas Report, is republished here on this website for the larger public because of its significance in terms of public-service.

Nigerian Oil in a Post- Diezani Trauma

Section: Kickstarter · April 19, 2022 · No comments |

By Toyin Akinosho,

In the Christmas of 2014, Nigeria had three months to go for elections.

I was living in Lagos, the country’s commercial hub, and frantically calling for the removal of Diezani Allison-Madueke as the petroleum minister.

For context, I’d briefly summarise why I had forcefully called for Diezani’s ouster before I go to discuss aspects of Buhari’s dismal performance.

The darkest spot on Diezani’s tenure was…

Read More

Guilty By Association

Section: Kickstarter · January 18, 2010 · No comments |

Toyin Akinosho

The World Economic Forum On Africa (WEF on Africa) feels more posh than most of the business gabfests on the continent. Not even the Africa Upstream, which provides top oil industry executives the” business reasons” for travelling to Cape Town, to luxuriate in the “Southern sun” every November, gets anywhere close to being as upscale.

Charlotte Bauer, an editor with the Johannesburg weekly Mail and Guardian, confessed that minutes into the opening plenary of the June 2009 edition, she began to get “Blackberry envy”. She wrote in the paper’s June 12, 2009 edition “My neighbours with smart phones in the packed hall at the Cape Town International Convention Centre were kept entertained as the contents of their inboxes became more fascinating compared with live proceedings”.

African leaders invited to lead conversations at WEF On Africa are themselves very conscious of being in an important place. “I am only attending Davos for the first time”, enthused John Kuffour, the then (outgoing) Ghanaian president, at the 2008 edition of the conference. His mistake of calling the scenic Swiss resort, where the big, global WEF takes place every February, to describe his pleasure at being in a regional meeting of WEF on African soil, was a profound Freudian slip. Imagine IF Mr. Kuffour was invited to the big event?

There wasn’t as much a sense of bonhomie at the 2009 WEF on Africa as it was in ‘2008. Absent in 2009 was the heady self congratulatory air, and the pervasive feeling of optimism-encouraged by high commodity prices and six percent growth rates- that marked the 2008 edition. The economic meltdown in the West had taken its toll on Africa’s commodity prices and the South African economy, the continent’s industrial engine, was imploding.

The somber mood of the 2009 edition of WEF on Africa notwithstanding, there was hardly any evidence that African leaders, as a collective, had learned lessons from the crash of 2008 and were desperate to turbo-charge the continent’s economy to achieve huge capacity growth. There were no ambitious, large scale, self driven projects on energy, intra continental transportation or local content enhancing, innovative technology projects that were going to dramatically transform the lives of hundreds of thousands of people at terribly short notice. Lessons from other parts of the world were lost on Africa: China and India were growing at much faster rates, driven by high technology enterprises and the Middle East, especially the Gulf States, were unhappy with their own apparent backwardness and were keen on spending their way into the 21st century. In Africa, on the contrary, it was the usual softly-softly, postage stamp approach; small scale power projects, “helping” small rural farming with subsistence methods and facilities that involve the heavy participation of Chinese investors as well as more investment in mining that were driven solely by outside parties.

I remember asking a question on investment opportunities in some country in East Africa and the Minister on the panel who responded to me said : “The Chinese investors we are talking to are…” I felt very tired.

In spite of this poor showing by Africa’s political leadership, I still allowed myself to be conned.

This is how it happened.

At a second day session on Africa’s agricultural potential, at which Kofi Annan, former UN Secretary General, emphasized the work his foundation was doing with small scale farmers, I asked whether it wasn’t time for African policymakers to start focusing on large scale farming. I noted that large scale farmers on the continent were mostly the settler minorities; Indians in East Africa and Afrikaners in Southern Africa. In Nigeria, now, everybody is talking about the “success” of the Zimbabwean farmer in the country. It occurred to me, I explained to the audience, to wonder, “Where is the scale minded African entrepreneur in farming? Where is the native African industrialist? Where is The Successful Black Commercial Farmer?”

That question earned me both admiration and reproach. At the coffee break

shortly after, Edward Boateng, creator of the CNN/Multichoice African Journalists Awards, walked up and gave me a short lecture. “You shouldn’t be alienating people” he charged. “East African Indians and South African Afrikaners are Africans, too. Africa needs all her talent”. To Arthur Mutamburra, Zimbabwe’s Deputy Prime Minister, I had, with my comments, become an instant friend. “This is the man who asked the question about black entrepreneurship”, Mutamburra told his wife, Susan, as a way of introductions.

I became, at terribly short notice, a “family friend” of Zimbabwe’s third couple.

And to my surprise, I was feeling cool about it. When Susan Mutambura earnestly explained that she’d been hoping to visit Lagos, the city of my birth, in Nigeria, I felt an adrenalin rush. And I found myself feeling quite exhilarated when the Deputy Prime Minister himself said over and over again: “You must visit Zimbabwe”.

The next place I got “invited” to join Africa’s political class was at the session on Free Trade Zones. After I complained that Africa’s big projects were perpetually on the drawing board, Felix Mswati, Zambia’s Minister of Trade and Industry said pointedly, “my friend, Africa’s current generation of politicians are different from those of the past. Now we want to do business, not politics”. Later, he gave me his card and allowed me to get into a discussion between him, his Ghanaian counterpart and an American State Department representative, who kept on repeating: “It’s true, Africa has a new breed of leaders”. I am surprised, as I write this, that I didn’t interrogate their conclusions, I didn’t argue with them. I was too content to be allowed to hang out with ministers. I didn’t even request for interviews, privately, to question these assertions. What new breed of leaders? Which African country is a showpiece in the direction of people centred development? What projects were happening in Zambia in which Zambian entreprenueurs were taking the initiative? What’s taking place in Ghana that could be compared with the quantum leap in economic progress that took place in Singapore 20 years ago, or in South Korea 15 years ago?

Two days later in the same premises: the Cape Town International Conference Centre. The World Economic Forum had wrapped up and South Africa’s most popular Conference venue was hosting the 4th Cape Town I International Book Fair. Here I attended a discussion entitled Hollow Men: Can Africa’s Leaders fulfill Africa’s promise? The conversation was between Moeletsi Mbeki, a hugely popular South African public intellectual and brother of the former South African president Thabo Mbeki, and Achille Mbembe, the Cameroon born scholar described by some as one of the most brilliant theorists of postcolonial studies writing today. Much of the discussion centered around Mbeki’s new book, Architects of Poverty: Why Africa’s Capitalism needs Changing. A highpoint of Mbeki’s argument was that Africa’s current brand of capitalism was comparable with the economic situation in 8^th century England, where a very few members of the gentry rode roughshod over the large population of the working class. He spoke about how liberation fighters on the continent always turned out to be oppressors themselves. And he used examples from Algeria (the men who fought the war of independence turned out to be overlords themselves) to South Africa (liberation comrades are the new fat cats) .

Although I felt it was going to be incongruous to ask Mr Mbeki his thoughts on the notion that there was a new breed of African leaders all over the continent. I asked him anyway. He looked me over in a way that suggested I hadn’t been following up closely on events and then he asked, “Who are these new breed of African leaders? Wasn’t that what was sold about a decade ago. Has there been any major difference in the quality of life of the people, on average?”

In that brief moment of Mr Mbeki’s response, my mind went to my repartee with the ministers at the World Economic Forum a few days before, at the same venue. I knew I had been conned.

The Game Changers Are Not Always the Most Expensive

Section: Kickstarter · December 5, 2009 · No comments |

Toyin Akinosho

The cost of Jubilee field development, Ghana’s first sizeable oilfield project, is $4billion. From sometime around November 2010, as the plan goes, this elephant sized deepwater field will deliver a hundred and twenty thousand barrels of crude oil every day into a floating production storage and offloading (FPSO) facility. By February 2011, Ghana will be exporting over one million barrels of crude every 10 days into the world market.

The country will come from nowhere to become Africa’s 11th largest producer of crude oil, after Nigeria, Algeria, Angola, Libya, Egypt, Sudan, Equatorial Guinea, Congo, Gabon and Chad, in that order.

A project of Jubilee’s size, which creates a full, world class industry almost entirely on its own, provides the kind of scale that excites my cousin, Yemisi, a commercial lawyer with a going practice in Lagos, Nigeria.

Over lunch recently, she expressed deep disappointment about an interview on the CNN programme Marketplace Middle East. in which the CEO of Gulf Keystone. an American independent, was gushing with pride about the ability to source some $l2OMillion to prosecute a number of projects in the Kurdistan region of Iraq. “That’s peanuts!”, my cousin complained. I believe I could almost hear her murmur: “My God, what could you possibly do with $l2OMillion”. What she said loudly, though. was this: “This is not the kind of money I am used to hearing about, regarding oil and gas projects, at least here in Nigeria”.

I clearly understand where Yemisi, a keen observer of her surroundings, is coming from.

In the last 10 years, a lengthy list of awesomely expensive oil and gas projects have come on stream in the Gulf of Guinea area; in Angola, at least five field development projects of a scale equal, or bigger than the Jubilee field, have been commissioned.

In Nigeria alone, for specifics: The Nigerian LNG project was commissioned in 1999 after $3.8Billion had been spent; the Bonga field project (on stream date 2005) has officially been reported to cost about $3.6 Billion, and there is controversy as to whether the cost wasn’t far more. The total cost of Erha field development(2006) is in excess of $3.5Billion. Agbami deepwater development weighed in at over $4.2billion. In construction, as we speak, is the Bonga expansion, otherwise known as Bonga North West project, for which a $200Million contract had been awarded for subsea development alone( provision of pipeline engineering, procurement, fabrication, installation and pre-commissioning services for pipe-in-pipe flowlines, water injection flowlines, umbilicals, as well as related production facilities on the seafloor and the deep marine environment).The cost of the entire Bonga NW work will not be less than $600Million, conservatively speaking.

In Equatorial Guinea, the Aseng condensate field development, granted official sanction in late 2009, will get into construction phase late in 2010. The bill for the project, aimed at producing 50,000Barrels of condensates per day at peak, is $1.3 billion.

The point, however, is that whereas these mammoth projects are headline grabbers, many of the game changing kind of projects are much smaller and, in the perspective of people like Yemisi, “inexpensive”.

Let me provide a shortlist of some of these projects-for they are projects too, whether they are just a wildcat exploration programme, a seismic acquisition shoot or a short distance gas pipeline construction- which are either going to be in construction, or in commissioning stage in 2010.

Construction of the proposed 56km natural gas pipeline from Uquo to IkotAbasi, both in Nigeria’s deep south is likely to start in 2010. At $120 million, it would be too cheap to excite my cousin, but it’s a trail blazing kind of project. As the Nigerian government talks about a gas masterplan to direct more natural gas to power plants and other intermediate, domestic uses, in place of a growing appetite for export as LNG, it is projects like Uquo-Ikot Abasi line that will become an integral part of the basic gas infrastructure.

At $65million the Agbami 4D seismic acquisition programme, which got underway in November 2009, is expensive by the standard cost of seismic acquisitions. The bill is double the cost of comparable acquisitions on similar, large sized deepwater fields. It will take four months for Seabird’s Hugin Explorer, to complete the acquisition. The cost of Agbami 4D lies in its uniqueness; the efficacy of the acquisition is not so much dependent on the vessel capability as it is about the cable reaching the seabed and capturing data that the best seismic vessel architecture cannot achieve. Operator Chevron wants to properly image a reservoir that is much deeper than the deepest known hydrocarbon reservoir and Seabird will help them do it through nodal analysis.

In Egypt, the combined solar and gas thermal project in Kureimat, located south of Cairo. is expected to be commissioned in 2010. This hybrid project will produce about 150 MW of power, 45 percent of which will be from solar parabolic troughs and steam turbines, the rest coming from natural gas turbines. The entire cost is $327 Million, of which the World Bank is providing $49 Million soft loan from its Global Environmental Facility. The Japan Bank For International Cooperation contributes $151 .29Million. The Egyptian government itself comes up with the balance of $126.48Million. If my cousin had seen Hassan Younis, the Egyptian minister of Energy and Electricity, explaining that the country was spending “only” $126.48 Million on an “important” energy infrastructure, she might have dismissed it. But this is a game changing kind of project; the largest solar energy project in the middle east and, for the record, in all of Africa. The South Africans, who have been so fixated on burning tonnes after millions of tonnes of coal in order to expand their power generation, don’t have such a project in sight in the short term. As important for me as anything else about the Kureimat plant is this: the project contractor is Orascom Construction; an Egyptian company listed on the Cairo and Alexander Stock Exchange.

Indeed, the large sized, money guzzling projects we read about every day in newspapers start, quite often. as modest efforts. When the American minnow. Triton, was about to drill its first well in Rio Muni basin, off Eq Guinea, in 1999, it could barely afford the money. The company was practically begging everybody to farm in. It was almost at the last minute that Energy Africa, the South African independent, bought 15°o. Now we all know that the discover-c of the Ceiba field opened the basin to the world, Today, nine years after first oil, the field and its satellite, Okoume, are doing 60,000 BOPD. On account of the project’s cash flow, Triton was bought over by a larger operator, Amerada Hess. The field is also the major reason why Tullow swallowed Energy Africa in 2003. As my friend, Emeka Ene, managing director of Oildata, the Oilfield Service Company, would say: “Do not despise the days of small beginning.

Yar’Adura’s Team Of Rivals

Section: Kickstarter · January 9, 2009 · No comments |

By Toyin Akinosho

Rilwanu Lukman, Nigeria’s newest minister for petroleum, is the public face of the group, within the government of President Umaru Yar’Adua, that re-instated the Power Holding Company of Nigeria, as the country’s monopoly power generation and distribution entity.

Rilwan Lanre Babalola, the newly appointed minister for power, was the Team Leader for Power Sector Reform at the Bureau for Public Enterprises (BPE), driving the privatization of the entire utility, during the last government headed by Olusegun Obasanjo.

The two personalities have diametrically opposite perspectives on improvement of the power sector in Nigeria. So, what are they doing together in the same cabinet?

Was the idea to bring Babalola in to join Lukman, in what used to be Ministry of Energy, to create a team of rivals? If so, to what end?

Lukman’s idea of the continuation of power sector reform is to have the PHCN run as government funded entity until 2011.

That is a sharp reversal of the policy that Babalola and others championed through the BPE, a framework which provided the grounding for the country’s power sector reform act that was signed into law in March 2005. That act supercedes any law on electricity generation, transmission and distribution in the country.

Babalola cut the image of the spokesperson for privatization of the power sector between 2002 and 2005, during which the power reform bill crawled its way through the bureaucracies of the state house and the national assembly. His statements vilified the running of the PHCN and he was quoted as saying that tariffs could not have been higher than the loss Nigerians suffered from the inefficiency of the PHCN, which he said was understaffed in the technical and marketing departments and over staffed in administration. At a public forum in 2004, Babalola disclosed that he had been asked, in private, even by people in the legislature, why he was so passionate about selling off

PHCN.

As of May 2007, the BPE had put up for sale three of the seven electricity generation companies (power stations) and all the 11 distribution companies carved out of the PHCN. As the Obasanjo government wound up, private investors had submitted a total of 102 expressions of interest (EOI) for the three generating companies on offer and 302 EOIS for the distribution companies.

Yar’adua’s arrival at the state house put all that effort on the back burner.

Lukman’s committee declared that much of the implementation of the reform programme, midwifed by the BPE under Obasanjo, was hasty and that the targets set out in the programme were not met. It noted the pending issues of staff pension, the failure to define the workings of the Rural Electrification Fund and the establishment of the Consumer Protection Fund, among other regulatory shortcomings. To Mr Lukman, it didn’t matter that these issues he listed did not grapple with the argument that the nature of graft, in Nigeria, guaranteed that a government owned power utility could not work. South Africa and Egypt, the biggest economies on the continent, are powered by utilities that are owned by government. But these countries are not Nigeria, simple.

A small digression here. The national consensus in Nigeria, as of May 29, 1999, when civil rule was ushered in after 15 years of military dispensation, was that the electricity utility and the telecommunications monopoly should be disposed off. Nigerian intellectual, commercial and political elite couldn’t guarantee that, like France’s EdF, or South Africa’s Eskom, electricity could be sustainably supplied by a state run entity in Nigeria. The rot in government parastatals, especially those of the commercial variety, was and is still so deep that even officials do not trust their own instincts.

Yet in July 2008, Lukman’s committee called for a halt to the sale of PHCN. Against the run of play, and a subsisting law which provides guidance for the end of the monopoly, the committee decreed “a strengthening of the utility through the establishment of a coordinating body at its headquarters to provide leadership.” That leadership mandate was to run for three years. That was how PHCN returned to run things.

The question, then, is, if PHCN would not be privatised until 2011, the terminal date of the Yar’adua administration, why hire a minister who is ideologically opposed to a PHCN monopoly?

Some have called on Babalola to return the country swiftly to the Obasanjo era reform agenda and finalise the process. They ask him to quickly complete the National Integrated Power Projects, involving the construction of 11 generating stations and an overhaul of old radial transmission and distribution system, with state money and then hand over their operations to those private companies who win in a competitive, transparent sale process. That way, they say, government would not have to spend any single cent more to provide electricity, going forward.

But what’s crucial here is what the president wants.

Is he prepared to allow the forty something year old Babalola push his own initiatives, or is he just having him in the cabinet, to suggest that there are young people in his court, while he implements the initiatives of the elderly Lukman?

With Babalola and Lukman in the same cabinet, are we going to have a bruising fight between those who want the status quo of Africa’s largest country lavishing money on a chronically ill power utility and those who want a choice to a more competitive environment, with a strong regulatory oversight that ensures equitable prices and businesses that don’t take advantage?

President Yar’adua has shown so far to be on the side of those who prefer government ownership of energy companies, no matter how inefficient. In September 2008, Mr. Yaradua’s spokesmen publicly disowned, in a very gruff manner, an announcement by the BPE to privatise the Petroleum Products Marketing Company. The government statement essentially reversed proposals that the BPE, itself an arm of the Nigerian presidency, had put forward after deliberations with members of Mr Yaradua’s cabinet. In the move against the PPMC sale, there were echoes of Mr Yar’adua’s first symbolic act in office; the re-nationalisation of two refineries (with total capacity in excess of 300,000BOPD)from a private enterprise that bought them, returning cheques with value in excess of half a billion dollars. Mr Yar’adua had stated then, that the state hydrocarbon company NNPC had only 12 months to restore the refineries to health. As of the time of writing this, 19 months after, the refineries are still short of that target.