During my recent trip to Lagos, I had the good fortune of having a meeting with Cyril Odu — current CEO of African Capital Alliance, Chairman of Union Bank Nigeria and all of that after 4 decades with Exxon Mobil Nigeria.
To say the man is a fount of knowledge about Nigeria will be to state the blindingly obvious — he easily pulls out dates from 1972 and 1977 like it happened only yesterday. I’m hoping that someday soon, I’ll be able to do a full and formal interview with him.
I’ve paraphrased some of his words.
How we got to the current structure of the Nigerian oil industry
During the early 1970s the primary goal of OPEC members was to secure complete sovereignty over their petroleum resources. Accordingly, several OPEC members nationalized their oil reserves and altered their contracts with major oil companies. In Saudi Arabia, they simply took over the top of the industry and left their American and foreign technical partners to continue running things as before. This partly explains why ARAMCO is one of the better run oil companies today. At the other extreme, the Libyans kicked out the oil majors and took over everything themselves. Indonesia opted for production sharing contracts with the oil majors.
Nigeria settled somewhere in the middle of these approaches with the Joint Venture Participating Model with the majors. Nigeria joined OPEC in 1971 and subsequently created Nigerian National Oil Company (NNOC), the precursor of NNPC which was created in 1977. Starting in 1973 Nigeria acquired 35% equity participating interest in the oil majors operated assets and gradually increased the equity stake to 60% by 1979. Note that the oil companies had already invested significant sums of money into exploration and production prior to government acquiring a participatory interest in their assets.
When you think about it, this was the beginning of the structure of the industry we have today with all the challenges, including government not able to meet its share of the funding requirement in a sector that can be self-financing, can be traced back to the method by which Nigeria nationalized its oil industry 40 years ago.
What was that time like?
I joined Mobil in July 1972 just as NNOC came on the scene. It was a time of great national pride — many people felt that Nigeria was on the cusp of something big and so a lot of young, bright people left the foreign oil companies to join the newly formed national oil company. Recruitment was easy for them as it was fueled by national pride.
Why didn’t I join the wave and move to the NNPC? I had just started on my career in Mobil and chose to stay because Mobil had shown they were willing to invest in me and my career. I had a career plan mapped out in front of me which involved working in different parts of the business, working in other countries UK, USA acquiring an MBA while on a work assignment abroad.
It paid off because I was able to have a long and very rewarding career with Exxon Mobil before retiring in 2012.
Is it that you can’t retire or you don’t want to retire?
After I left Mobil, Okey (Enelamah) and Dick (Kramer) asked me to come on board here (ACA) as some sort of consultant in the energy and finance services sector for the private equity firm in 2012. It sounded like a fun new thing to do so I thought why not?
Everything was going as planned until late 2015. Udoma Udo Udoma was nominated as a Minister which meant he had to resign as Chairman of Union Bank. ACA is an investor in Union Bank so I had been the firm’s representative on the bank’s board as a non-executive director. The bank needed a new Chairman and it fell on me to take the position. As if that wasn’t enough, Okey also got nominated as a Minister and had to resign as CEO. It then fell on me to take over the running of the firm.
So quite literally overnight, my workload here doubled. I thought I was coming here to do a relatively easy job as an adviser/consultant.…
It was a long and fun conversation and not even a tenth of it is captured here. But I thought it would be worthwhile to share these bits with his very kind permission.