Basil Omiyi , new Independent Non-Executive Chairman of Seplat Energy Plc speaks on Seplat Energy’s commitment to providing long-term sustainable energy for Nigeria, leading the energy transition, delivering shared value to all stakeholders and maintaining a strong Board driven by the highest standard of compliance and corporate governance.
As the board’s new Chairman, how would you manage the Seplat Energy board structure?
I think one thing we have in common at the board is our total commitment to very strong corporate governance. Remember, the world today is very small. What a company really has to market is its corporate governance standards. That is what attracts somebody to want to invest in your company. Seplat wants to make sure you’re doing the right thing. So, on the board, we have a board that is fully compliant in this regard. We have a common position, shared the journey and then fully committed to upholding the highest corporate governance standard. If you have that commitment from the board, the rest of the thing really becomes easier because you have agreed on how you are going to work, and that is usually where there will be disagreements on the board. Then what are your goals? What are your values? You have to have the standard – the highest standard of ethics. You have to have the highest standard of stakeholder relations; respect for people; committed to your society and country. All these we share. Having said all that, the company has built a body of policies and standards that have been accepted and signed onto by our staff. Therefore, I really think that aligning the board is not our biggest challenge, rather our biggest challenge is staying faithful to our journey.
Passion and commitment to lead the board
If I describe passion, I won’t quite describe it as a tint of madness. I would describe it as a commitment that actually has no limits. It is a risk but you understand the risk and you know how to mitigate the risk; but you are not going to stop your journey. You will deal with the risks and that is really what passion is about. So, if you want to fly from the top of a building and you are committed to it, you have to make sure there is a soft landing, maybe some balloon on the ground. So, when you jump and then you have a riskier fall, maybe you gain something from it.
So that’s really what passion is all about, full commitment to the goal. I just told you what Seplat’s whole purpose is, which is to keep providing sustainable energy solutions to society. This means that in that journey, one should be ready to embrace whatever technology allows you to do. You will hire the best people to help you do so. You keep a strong board, you have to be in the markets where you raise your capital, you have to demonstrate that you have the highest standard of leadership at the board, the highest standard of compliance and corporate governance to attract investment.
So, that is really the dream, and there can be no passion stronger than that. Remember that at the time Seplat was created, there were no climate discussions but today we have to ride along with what we see and be a leader in climate and planet and people. Whatever new and green energy solution you push, it is because of people on the planet. That’s the kind of passion I would describe we at Seplat have.
Consolidating strong Seplat Energy Board
Seplat Energy was not just a business that was started to only do oil and gas. Seplat was actually an idea and that idea was owned by one young man at the time, the past chairman. I knew him when I was running Shell in Nigeria. He will come around to discuss how this idea of creating a Nigerian indigenous company that will become as big as Shell was at that time, and I will laugh and he will say for example, if you give us these assets, we believe we can run it better than you. We are not saying you are not running it well, but our costs will be lower, we will be able to run it cheaper because we are not as big as you and we will deliver value to you and also deliver for ourselves. So Seplat Energy didn’t just start by three people deciding to form Seplat. It started by a man owning that idea and having shared that idea before it actually matured. And having seen the risks Shell at the time took to actually get through air miles to a small company and let them go and fly on their own.
For me, seeing that they actually had taken that small company and had tripled the production, I knew that the journey he described to me in my office those days as a young man was actually something he was serious about.
Hence when they asked me to join the board, I was kind of happy to be part of that journey. At that time, I had retired from Shell. So, it started as an idea and because ideas never die, they just grow and get improved. In fact, if you look at all the people who joined the board from the beginning, you will realize that they are not just very important people, but they also share this African idea of an African company that can play in the international space and that is what brought about the type of board we have. If they really wanted a board that just sits at meetings and earns their fees and goes home, then such a board cannot support the kind of progress you have seen in Seplat.
Message to shareholders and stakeholders
I think we have been very faithful on dividend in good times and bad times. We have kept a very good dividend policy that is fully communicated to our shareholders. What we can tell them is that to be able to sustain that dividend policy, we need to grow the ‘cake’. And that is why the new acquisitions we are about to go into are very relevant. Yeah, once you grow the business you grow your dividend and then you can sustain your dividend, as you can’t sustain a dividend on a diminishing business. So, the message to them is that Seplat has a growth path that will sustain dividends.
Impact of listing on NGX and LSE
You know, it is not easy to go and list your company because you have to commit to total transparency. Well, you have to make a statement. Of course, being a Nigerian company, our first listing jurisdiction has to be here because we are proudly Nigerian and because we want to talk to the outside world and we have ambition to work internationally. Listing in London was the next natural thing.
Our commitment then was that we adhere to the stricter of the different jurisdictions where we work. So, if on a particular issue, the UK jurisdiction regulation is stricter than the Nigerian one, we take the UK one. If the Nigerian one is stricter, we take the Nigerian one. For example, at our standard of listing in the UK, it is not compulsory that we have an independent chairman. In Nigeria we are on the premium board but in the UK we are not yet on the premium.
Because we decided we had an ambition to list on a premium board which is where the big oil companies of the world such as Shell are, there you have to have an independent chairman and that really drove the commitment we made to the market that at such a time we will have an independent chairman.
So, I just want to tell you that we are very used to working in these multiple jurisdictions and as long as you commit to apply stricter rules, you will not fall foul of the rules.
Acquisition of ExxonMobil
First of all, we stand on a very strong legal footing that the acquisition we did, is completely in compliance with the law of Nigeria and we are making the case and the seller is making the case too. It is really the seller who makes the case that he has the right to sell and we have a binding agreement with the seller and will support them in the way they do it. We at Seplat think this acquisition is good and great for Nigeria. The seller could have sold those American interests to a Chinese company or an American company and this discussion will not even have come up. So, we have to make the case that this is good for branding Nigeria.
Funding ExxonMobil acquisition
The acquisition has been done because the seller would not have signed the sales purchase agreement if it had not been done. Every asset is acquired by a mix of debt and equity. We have debt; we put the equity position down because the debt is oversubscribed.
Don’t forget that in financing assets like this, what matters to the financing banks is what confidence do they have on the board and management of that company? That is what drives it and by the way, our debt today, for our size and history is not excessive. We are not as leveraged as most of the companies you see. We are actually today under-leveraged if you look at our potential and the direction we are going.
Difference between Orjiako and Omiyi
No, ABC Orjiako and Basil Omiyi are very different people. I can tell you that we are very different people and I think the directors who elected me as chairman also know that. But what we all have in common is that we share similar values. Certainly, there will be a difference in style but we share very common values and when you have common values, you deliver. One thing we have in common is that we are very impatient with lack of delivery and so we pursue delivery passionately. We share that. If you have the oil and gas resource on ground, the capital, and good people, delivery then is what you get.
Nigeria is still experiencing shortage in gas, high pricing. What is the challenge and what is the way forward?
Domestic gas requires investment and it requires the government to encourage such investment. But at Seplat, we are modifying the new plant we are building in ANOH, the Sapele plant rebuild we are doing and the Oben gas we have are all going to have LPG facilities. So, with that, we will go into the LPG market putting domestic gas into people’s homes. The gas that is in the pipeline cannot be used for cooking because it has Co2 sometimes and sulfur is in it and it’s not good for you; so we really have to go for LPG and that is our goal. This is why we want to get into the LPG market, to provide cleaner, healthier power to people to replace the wood they burn or the charcoal they burn; we cannot be planting 5 million trees and people are cutting them down for firewood. So, it requires investment and if there is significant LPG available in the society, then the price will go down because demand drives price.
Future of gas and Seplat
Seplat talks about providing long term sustainable energy for Nigeria and associated with that is that we will lead the energy transition. If today, our gas produces 30 per cent of the electricity in Nigeria, just imagine what the figure might be when we bring in additional gas plants. So, we will lead the transition to greener energy and the way we are going to do that is this: firstly, we need to keep our oil production up to finance the economy of Nigeria because oil will still be there for the economy of the world for a long time especially developing countries in Africa, and this is one of the foreign exchange resources we have. It is that oil that will finance the development and the technology for greener energy. So, the two go together.
Secondly, what we want to do is to use gas as a transition because it is cleaner than diesel and all that, by making more gas available to people and they can switch away from diesel. We will already be reducing Nigeria’s carbon footprint. By going into LPG, we save our forests and we also get cleaner gas. We will look at our current plant and facilities and also reduce the emissions into the atmosphere, including gas flaring, but really looking at the efficiency of the plants themselves.
This is in a bid to reduce our carbon footprint in the market. We will attract financing into Nigeria from projects like the Tree4Life Initiative because by doing so, you are trading. You know the tree during the day takes in carbon dioxide and so it is called a sink.
As the factories are producing carbon dioxide, the trees take it out. One of the significant reasons for global warming is because of deforestation in the world. So we are going to contribute to creating a carbon sink and for that we can actually attract investment to help or improve the facility to the point where we don’t put in more carbon.
We then go into renewables because that is our goal. There will be technologies along the way called carbon sequestration, where you take out carbon from the atmosphere, and you can actually re-inject or convert it to something else. Those are technology-driven things, and they need to be paid for, which presents the need to keep oil production going. We intend to go into electricity which is power.
We want to have a solar plant and so we will go into renewables and I think in a couple of years, you will hear our first steps into renewables. We will go in small but we will go in with commitment and I think it is part of our story.