Immanuel: Nigeria Needs Gradual, Sustainable Transition to Cleaner Hydrocarbons for Its Future Energy Needs’’

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The Co-founder and Managing Director of Chappal Petroleum Development Company, an oil and gas industry entrant focused on developing large upstream brownfield assets in the Niger Delta, Mr. Ufoma Joseph Immanuel, in this interview, provides insights on the vision and mission of the company. Peter Uzoho brings the excerpts:

Recently, you co-founded Chappal Petroleum Development Company. Can you give us key insights on the company -its purpose, organisational vision, and mission?

We founded Chappal as an Environmental, Social, and Governance (ESG) centric independent that would focus on disciplined project execution and embrace technology in developing upstream assets. We identified a gap in the industry that we can address via long term investment through the commodity cycle, we are focus on mature brownfield reservoirs, building and/or rehabilitating associated infrastructure, and the development of ancillary gas projects. Our vision is to build a company that works the complete hydrocarbon value chain in a sustainable manner that emphasizes people, planet, and profits in the process of facilitating energy transition for Nigeria.

You said that Chappal is an ESG centric independent. What exactly does that mean?

ESG refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. Chappal in placing ESG at the core of its operating philosophy is very different from having ESG compliance as an ancillary requirement to doing business. It means that in everything we do as a firm, we seek to equalise the objective of the community, the environment and profitability for investors. It means for instance that we may take an altruistic view of certain sectors like gas, for example, we will have a different perspective on the investment cycle and how we allocate capital.
As a firm, we will also prioritise time and resources in ventures that facilitate energy transition in Nigeria because it is good for the country and will be good for our investors in the long term, even though the immediate returns might be lower than alternative investments.

Who are your Co-founders and initial directors in the business, and how can this collaboration be synergised in building the brand ‘Chappal’?

I co-founded the company with Abayomi Awobokun, founder and CEO of Enyo Retail and Supply, one of Nigeria’s newest entrants in the downstream oil and gas space and already one of the best brands in that sector in only three years of existence. Awobokun has the unique distinction of having run two successful downstream businesses in Nigeria in simultaneous succession. He has led a business with over $1billion in annual revenues for many years, led business expansion from Nigeria to West Africa, Europe, Southern Africa, and even the Middle East. He brings critical experience in organization building, optimization, and change through the implementation of technology, as World Economic Forum Young Global Leader, he has represented the very best of the next generation of Nigerian Corporate Management international for several years.
Abayomi is tasked with overseeing organization culture and structure, ensuring that we are building an institution that is efficient and innovative. Our third Director, Mr. Victor Imevbore, is one of the most experienced and accomplished ESG professionals in Nigeria. He has worked with or has been part of every major study into the development, impact, and management of hydrocarbon-related activity on the geography and people of the Niger Delta. His work with the World Bank, IFC, and United Nations are reference points in the industry. He is also driven towards innovation and has worked closely with Industry regulators in Nigeria where he also brings a wealth of experience. We invited Mr. Austin Avuru as a shareholder and to become our Chairman. Austin has built arguably the most successful indigenous company in Nigeria and pioneered the implementation of several initiatives in the utilisation of natural gas in Nigeria. Frankly, he needs no introduction, his accolades are well articulated in numerous journals. He has the benefit of having experienced what we call the “other side of the fence,” given his time at NNPC before crossing over to build businesses in the private sector. This juxtaposition of perspectives makes him an honest broker in building a framework whereby business and government co-exist and thrive. At Chappal, his strong governance credentials, years of experience, and passion to see the sector develop will be very key to our becoming a consistently successful organization. Together, we complement each other with the right balance of skill sets, diverse experiences but common unifying trait, in that we want to build a unique organisation.

As an economist by training and having held several positions in Finance and Strategy, can you specifically highlight your key industry expertise and experience in the oil and gas sector?

As an economist, you are taught to be curious. So, by default, one is always looking at gaps in a value chain and how best to manage scarce resources. At Eroton E&P, I was a pioneer member of the team that led the transition post the acquisition of the OML 18 interests from SPDC, setting up the business systems from scratch and making Eroton the successful and efficient cost producer JV in our divestment class within our first year of operations. The work we accomplished in that inaugural year remains an industry benchmark for the post divestment integration of an indigenous player to date.

As Head of Corporate Finance & Strategy for Eroton E&P, I held multiple roles that straddled operations, finance, and strategy which included managing a consortium of eight local and international Lenders through a sudden oil price crash and subsequent currency devaluation while overseeing a delicate price hedging programme that meant we were the only Upstream company in Nigeria that did not default or restructure its obligations that year.

At the Joint Venture level, I was fortunate to work alongside various teams within NAPIMS /NNPC in developing the alternative funding structures, long-term development plans for the asset, and initiatives to monetize gas where we collaborated extensively with the team at Notore Chemical Industries.

Perhaps the achievement I find most noteworthy was the origination of the concept, development, funding, and execution of the Alternative Crude Oil Evacuation System (“ACOES”) for the OML 18 JV and other JV’s along the eastern corridor. This project eventually became a standalone entity of its own, called Energy Link Infrastructure, which is the first indigenous company in Nigeria to hold an Oil Pipeline License and Terminal Establishment Order as a standalone entity for the evacuation of crude oil.

From my initial pitch to the Eroton Management and then walking into NAPIMS / DPR with a concept paper, ACOES was an ambitious project to build a 50.2km subsea pipeline that takes hydrocarbons offshore to a dedicated FSO with 2.0 million bbls storage capacity; it required us to build consensus across the board, creating an inter-agency working group that involved the NPA, Federal Ministry of Environment, NIMASA, the Nigerian Navy, NAPIMS, NNPC, and the DPR to execute the project. Suffice to say that the ACOES template will not only form the bedrock of crude evacuation for all the injectors across the eastern corridor of the Niger Delta creating an alternative to the Nembe Creek Trunk Line and Bonny Crude Oil Terminal which will benefit the industry and the nation long term.

How do you plan to leverage your expertise in driving Chappal to the expected position in the industry?

Perhaps, the greatest advantage one can take from past experiences is the conviction that things are possible in Nigeria and one must at their core beliefs in this country, trust in its system, and work hard despite the challenges to affect change. Expertise and skills are ancillary compliments to this core conviction without which nothing is possible. As CEO of Chappal, I am persuaded by the idea of Nigeria: that she, as a country, can and will be prosperous and that we in the business community must work hard to bring this about, to thrive despite the challenges that come our way. That to impact change, we must be prepared to take bold innovative steps, challenge old norms and customs and work diligently to execute. Chappal is the sum of our shared experiences, objectives, and future goals and as a team, we all bring unique skillset, experience, and perspectives into this venture. Working with these gentlemen who I am fortunate to call my partners, we have articulated a detailed business plan that falls to me as CEO to execute, however it will be a collaborative effort in the coming years to build the company into the entity that we envision.

Chappal Petroleum Development Company was established to focus on deep value and mature brownfield upstream opportunities in the Niger Delta region of Nigeria. Why this focus?

Across the Niger Delta, the body of hydrocarbons that we produce today was largely discovered, developed, and hooked up to production between the late 1970s and 1980s. This body of hydrocarbons (and its associated infrastructure) have begun to deplete and depreciate over time to the point that we are now as an industry facing challenges with rapid reservoir depletion, increasing base sediment & water production, and the management/disposal of produced water in an environmentally sustainable manner. We urgently need to finance the drilling of new wells that will go deeper into the subsurface incorporating more technology into our development and operating methodologies and finance new evacuation infrastructure. At the same time, the wider industry has seen a seismic change in its costs structure with capital now being deployed to structurally lower costs over time and transition from heavy hydrocarbons to lighter fuel sources like gas. We focus on this area because it is where we can have a meaningful impact that goes beyond the profitability and return, we generate for our investors, are seeking to influence the philosophy and psychology behind how hydrocarbons are developed.

Despite advancement in technology that has seen the emergence of new players on the continent, why is Nigeria still unable to fulfill its potential in this sector?

The important thing is to focus on how best we as a country can cover the ground and make up for the lost time and l am persuaded that the imminent passing of the PIB will be the fulcrum that positions us towards that goal. There are structural advantages that Nigeria has which position us very well, we see this period of lower oil prices as an advantage to allow one to build out ancillary businesses that feed off the core upstream for the next cycle but in a way that creates a natural hedge to avoid future vulnerability to oil prices.

Most industry observers believe that the future of energy belongs to new tech. In specific terms, what is Chappal doing to capture the benefits of these tech advances?

I believe this statement is true, but it is also incomplete. Technology in itself cannot be the solution in a vacuum as it must come hand in hand with structural reform and the execution capability to implement technological change. It is also inevitable that the energy mix for the future must change, Nigeria cannot continue to burn expensive/heavy oil-based hydrocarbons to generate electricity to power our homes and industries, provide mobility for our vehicles and vessels. The economics barely work today and will not work when we are a nation of 300m+ people which the United Nations predicts will happen in our lifetime; some of the solutions to these problems are structural and for others, technology offers the answer. In Chappal, we are very focussed on the wider theme of energy transition and more narrowly on the technologies that will facilitate that transition along the hydrocarbon value chain. So, everything, from how we drill cheaper wells, build for efficient infrastructure, lower operating costs so we can recycle that capital into developing downstream projects and harness all the hydrocarbons in a more meaningful and profitable way reducing waste.