International oil companies (IOCs) have chased opportunities in the Niger Delta region for years, given its abundant hydrocarbon resources at convenient production prices. However, their local onshore operations have often been plagued by security threats and corruption allegations. Their strategic value is now diminishing as IOCs reassess their global footprint to adjust to the new reality of the global oil market. This confluence of factors has created a window of opportunity for local companies willing to step in to revive some of these onshore assets. Heirs Holdings, a Nigerian conglomerate led by tycoon and champion of Africapitalism, Tony Elumelu, stands out among them.

“This was a crazy window of opportunity for indigenous players to come in,” Samuel Nwanze, director of finance and investment at Heirs Holdings, tells fDi, referring to the group’s acquisition of a 45% participation in a major oil bloc (OML17) in Port Harcourt, the country’s main oil hub, from Shell, Total and Eni in January. 

While OML17 currently produces about 27,000 barrels per day (b/d), it produced as much as 100,000b/d in its heyday. Global banks and investors backed the deal with a $1.1bn financing package, betting on Heirs Holdings’s plans to bring the bloc back to its past glory. 

“There has been no capital allocation to these assets over time,” Mr Nwanze says. “When indigenous players have acquired assets from Shell, the same thing always happened. They went in, did a few things and production took off.”

He adds that while some communities have stopped Shell from operating a few wells, things will turn out differently “because we are an indigenous company, we are embedded within the community and we pursue a shared destiny approach”.

Heirs Holdings is acquiring assets in its pursuit to become an integrated energy company, serving other African countries beyond Nigeria. The company, through subsidiary Transcorp Power, owns a gas-fired power plant and is looking at developing assets along the whole value chain of the energy industry. 

“This asset [OML17] also has a significant amount of gas reserves, and these reserves feed into the huge gap that we have in the country, with gas being a precursor for energy. In Africa, there’s a huge energy gap and we need energy to address the challenges of the continent to drive development.”

While the world is transitioning towards renewable source of energy, Mr Nwanze believes that the time is not ripe for Africa to do this just yet. 

“We’ve actually had a number of conversations with big players globally, related to [renewable energy]. However, we believe that Africa is really behind with respect to the whole renewable play,” he says.

“The energy gap that needs to be filled will not be filled through renewable resources alone. We will see a mix of sources of energy, and this mix in the initial period will be more oriented toward traditional sources while we build a base of renewable energy generation. We definitely have our eyes on the ball, but we are focused on addressing the immediate and medium-term issues that we see, as far as Africa is concerned.”

This article first appeared in the February/March print edition of fDi Intelligence.