A Review of the Nigerian Energy Industry

Afren expects $1bn revenue from Nigeria this year

06 February 2012, Sweetcrude, LONDON – Oil explorer and producer, Afren, expects to earn over $1 billion in revenue from its Nigerian operations, the company’s chief executive officer, Osman Shahenshah, has said.

Shahenshah, a fierce critic of conventional approaches to development economics, also has a lot of belief in Africa as a place for oil and gas companies to operate. The continent, according to him, is less risky to operate in than, for instance, Britain.

“Nigeria is really the engine of our production and cash-flow generation,” says the Afren boss, adding: “This year we will generate more than $1bn of revenues from the country”.

He told The Telegraph of UK: “What’s fascinating about Africa from an oil and gas perspective is that the terms of operation have been much more stable than they have in a number of Organisation for Economic Cooperation and Development countries, including the UK”.

Afren’s oil production in Nigeria reached 52,000 barrels a day at the end of last year. The company also has production in Cote D’Ivoire and exploration licences in Ghana, Congo-Brazzaville, South Africa, Madagascar, Ethiopia, Kenya, Tanzania, the Seychelles and the semi-autonomous region of Kurdistan in Northern Iraq.

Analysts say this is not a bad accomplishment for a company set up just seven years ago with £650,000 given or borrowed from friends and family.

Speaking about the beginning, Shahenshah, who also worked as a Dresdner Kleinwort Benson investment banker in emerging markets before co-founding Afren with Liberian-born entrepreneur Bert Cooper in 2005, recalled: “We had an office in one room with one multi-function fax printer scanner, two employees, no assets and no money other than our seed capital.”

A flotation, however, raised £8 million to buy Afren’s first asset, a 4.4 per cent stake in an offshore exploration block between Nigeria and the island nation of Sao Tome and Principe.

The company later moved to the main list of the London Stock Exchange and paid $100 million (£63.2 million) for Toronto-listed explorer Black Marlin and then $588 million for assets in Iraq’s semi-autonomous Kurdistan region in July last year.

It now has a stock market capitalisation of £1,4 billion and is aiming to exploit some 1.3 billion barrels of prospective resources, planning to drill 12 to 14 exploration wells this year.

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