The 2014 documentary 'Big Men' touched on the oil boom and subsequent economic epidemic due to sole commodity dependency which has no doubt swept Nigeria. As some prosper, poor corporate governance has stifled community support and devaluation has gripped the country in financial downturn.
However, Nigeria is on a serious geo-commercial rebound and intrepid investors and analysts are moving quickly to refresh the nation's narrative and potential for prosperity.
I had the opportunity to speak with Tor Langoy, Chief Executive Officer of London-based Karra Oil & Gas, a Nigerian-focused oil exploration company, about the challenges and more importantly, opportunities in the Nigerian O&G sector and why the nation is on the verge of a dynamic upswing.
You are on the verge of listing Karra Oil & Gas on London's Alternative Investment Market. What is the motivation for this public listing?
Karra Oil has been for the past four years and still remains in private hands. As we seek to expand the business and swiftly fast track the field development to 20 000 bpd, in additional to taking advantage of the rising oil prices, we felt it was prudent to plan for an Initial Public Offering (IPO).
Further, Karra Oil is in the unique position of being in a sole-risk block ( meaning no NNPC/ government involvement ), situated only 12 km from the Brass Export Terminal and has imminent production of 10, 000 bpd. Coupled with solid, Nigerian expert management, we offer the public market a uniquely de-risked deal with low risk and high returns.
Is it safe to suggest Nigeria is still very much an 'oil economy' and diversification at the public or private level is not being taken seriously?
Nigeria is surely an oil economy as Norway is an oil economy. The main difference between Nigeria and Norway is the cost per barrel is much lower in Nigeria with better fiscal terms, thus allowing for solid returns. As a Norwegian, I would much rather invest in Nigeria as the risk & return profile is arguably better here.
Where do you envision Karra Oil in five years' time?
Karra Oil should be a multi billion USD market cap company with close to or in excess of 100 000 bpd in net production. Considering the fact that my partner and Chairman, Mr Sastry Karra has already created a billion plus USD oil company in previous years and that we have a great pipeline of discretionary deals, we expect to reach 100, 000 bpd within 3 years' time.
How do you plan to play the role of 'good corporate citizen' in the Niger Delta? What, in your view, is this contrasted by?
We strive to provide local host communities with proper education, fresh water and work opportunities. Many oil companies in Nigeria forgot their local stakeholders and failed to engage with the host communities, which in turn created unnecessary downside risk. We mitigate this risk by engaging proactively with host communities, thus providing a better lives for surrounding communities while shaving off potential risks.
How would you gage market appetite to invest in Nigeria's oil sector and in country?
Two key benchmarks for Nigeria upstream, Seplat and Eland, have twice it's market capitalisation than last year. This signifies that the market is open for well run companies to operate in Nigeria. Karra Oil seeks to adhere to "western best practices " with proper corporate governance, best in class management, world class auditors and in short, an agenda to set a new benchmark for Nigeria focused upstream companies.
My invitation to other industry players is to do the same and make another 10 'Seplats'. There is surely room for it.
Any final takeaways?
Nigeria upstream surely has risks attached to it but so do other oil producing nations. Where would you invest if you had to chose between Venezuela or Nigeria? Or Libya?
There are few oil producing nations who offer the same or better risk and return profile like Nigeria. In fact, I don't think one can ever neglect Nigeria, as it's one of the most prolific oil basins on the planet with a stable and business friendly government.
Lastly, I may add Nigerians are in general happy and positive people, with a sense of humour which adds an unexpected culturally distinct dimension for many newcomers.