Adewale Fayemi: Growing influence in Uganda’s oil industry
RONALD MUSOKE May 29, 2017
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Adewale Fayemi
In September 2015,Adewale Fayemi, became the General Manager of Total E&P Uganda with a clear job brief: Prepare and oversee Total’s operations in the Lake Albert basin transition from the exploration and appraisal phase to the development phase, writes Ronald Musoke
Fayemi’s appointment came just nine months after the departure of his predecessor; Francois Rafin, who was re-called to the firm’s headquarters in Paris.
Rafin had come to Uganda at a time the government and the oil firms were painstakingly ironing out details of an agreement on the commercialisation of Uganda’s oil through a crude oil export pipeline and a refinery.
It was not until September 2013 that the government issued the first production licence to the Chinese firm, CNOOC. Its partners, Tullow and Total E&P Uganda had to wait a little longer as both the government bickered over the oil production strategy.
With such issues at the back of his mind, Fayemi said in one of his first interviews with the media that he hoped to get things moving.
With over 20 years of experience spanning all aspects of the upstream oil and gas sector; including project development, operations and exploration in different domains (land, swamp, offshore, deep offshore) in Ivory Coast, Nigeria and The Netherlands, he probably knew what he was saying.
Pick-up in activity
The Independent is interested to know what Total’s strategy is, now that it is effectively taking the lead role of commercialising and even managing Uganda’s petroleum resources across the value chain.
For answers we headed to the company’s headquarters on Yusuf Lule Road which overlooks the emerald 18-hole Uganda Golf Club course in Kampala. Here, the recent pick-up in activity is quite evident. We have to wait 30 minutes outside his office on the fifth floor of the Course View Towers for Fayemi to see us. But we are kept busy watching the buzz of activity around the office.
One man, Martin Krzewski, Total E&P Uganda’s Business and Development Manager, for example, has no less than two meetings in that time. He is a cheerful man and he breezily walks out of one of the boardrooms where he has just had a meeting. After a few minutes of freshening up, he enters another boardroom for another meeting. Later they are joined by Zhi Chen, the head of the legal and commercial department at CNOOC Uganda Ltd.
Soon, Ahlem Friga Noy, Total E&P Uganda’s Corporate Affairs Manager ushers us into Fayemi’s spacious and well-furnished office. After business pleasantries, Friga says the General Manager can only afford a short time for us. He has to go into another meeting in 30 minutes.
We note that for a long time, West Africa remained the heart of Total’s continental activities but in recent years, it has also been engaged in a move towards new oil provinces, especially in East Africa as shown by its acquisition of the Lake Albert fields in 2012, a development which put Uganda at the centre of its East African strategy.
First, says Fayemi, Total intends to develop Uganda’s petroleum resources in the “most economical way,” but also ensure that the development is environmentally compliant because the activity is in a sensitive area – the Murchison Falls National Park.
“Our biodiversity charter is quite clear on this; which is to make sure that there is no net loss to the environment,” Fayemi says.
The global conservation non-profit—the International Union of Conservation of Nature’s (IUCN) red list— shows how Total’s project is in an area of Uganda which hosts 14% of all Africa’s amphibians and 52% of the continent’s birds, 35% of all butterflies, 39% of all mammals and comprises 70% of the country’s protected areas. Fayemi says they are up to the challenge of extracting oil from the conservation area.
Total’s operations are being developed by strict adherence to environmental and wildlife policies with the National Environment Management Authority (NEMA) and application of international good practices illustrated by the International Finance Corporation (IFC) performance standards which are regarded as the most stringent on environment and biodiversity.
In 2013, for example, Total E&P pioneered the use of highly innovative technology in the acquisition of seismic data using cable-less 3D technology, for the first time onshore in Africa.
“This is an industry that we don’t want to see start and end (just) like that; so we see the industry beyond 25 years that our licences stipulate today,” Fayemi says.
Total’s grip on Uganda’s petroleum industry is not only visible in the upstream sector, it has also made in-roads into the downstream following its acquisition of the Gulf Africa Petroleum Corporation (Gapco) operations.
With the company now boasting over 230 gas stations countrywide, the French firm is probably the biggest downstream company in the country.
“The focus and strategy for Total is to develop places in East Africa as we have shown in other parts of Africa so we remain the leading international oil company in the region,” Fayemi says.
Wrapping up deals
Generally, Fayemi says both the upstream and midstream developments on the Lake Albert Development project are going on well. Indeed so much has happened under his stewardship over the last 22 months.
In April, last year, Fayemi saw the government finally choose the Indian Ocean port of Tanga in Tanzania as its preferred route for the $3.55b crude oil export pipeline. Four months later, in August, he received three production licences on behalf of Total E&P Uganda B.V.
At the moment, he is leading his team of negotiators to wrap up a deal which will see Total ramp up its stake in Uganda’s upstream sector from its current 33.33% to 54.9% following Tullow’s decision early this year to farm down 21.57% of its 33.33% of interest in Exploration Areas 1, 1A, 2 and 3A in Uganda to Total E&P Uganda B.V for about $900m.
CNOOC, however, recently notified Tullow that it has exercised its pre-emption rights under the joint operating agreements between Tullow, Total and CNOOC to acquire 50% of the interests being transferred to the French firm on the same terms and conditions that were agreed between Tullow and Total.
Fayemi refuses to give an authoritative timeline and only says, “The joint venture partners are working as hard as possible to make sure that this is finalised as soon as possible.” He immediately delves into the current developments.
“We are all mobilised to make sure that we deliver first oil in 2020 and the machine is in motion.”
That is the target and we are confident that the timeline is achievable but, Fayemi quickly says, it will require collaboration between the joint venture partners and the governments (Tanzania and Uganda) to achieve that target.
Total and its partners are preparing for the development phase, which is expected to usher Uganda into the league of oil producing countries in the world by the end of 2020.There has been renewed vigour in the industry in recent months following recent developments.
In January this year, officials from the governments of Uganda, Tanzania and the three oil firms jointly launched the FEED study for Uganda’s 1445km-long crude oil pipeline being done by the Houston-based Gulf Interstate Engineering at a cost of $11.5m. This study is supposed to be completed by the end of August.
Another FEED study for the central processing facilities for two oilfields to be operated by Total—one at the northern tip of Lake Albert within Murchison Falls National Park and another which is to the East of Lake Albert in Buliisa District— was launched on Feb.14.
The FEED studies are to be used to determine the scope, cost, and scheduled estimates that the oil companies will base upon to make their Final Investment Decision before the end of this year.
Fayemi says Total already has teams that are mobilising in the field with the contractors for the environmental and social impact assessment studies.
“We have also started the resettlement action plan (RAP) process which will effectively lead to land acquisition so that we begin effective project implementation on site.”
Preliminary estimates put the total investment for the project at between $8b and $10b, including oil wells, feeder pipelines and central processing facilities, and a crude oil export pipeline.
Fayemi confirms our perception when he says he has found his close to two years in Uganda “very good and interesting.”
On the flipside, however, there is one clear blemish on his stewardship so far—the internal dissent he faced early this year when close to 100 local staff laid down their tools in protest against “unfair and harsh working conditions.”
The local staff complained that although they had honoured the management’s enforcement of tough deadlines for the benefit of the Total brand, management had refused to act on the employees’ grievances that had been pending since 2013.
The strike which started on Jan.31 followed several months of internal apprehension and grumbling that management had for long tried to contain through reprimand and intimidation. So how did he deal with this issue?
“There were internal discussions and we resolved them amicably and that is the way Total does things,” Fayemi says, without giving away much.
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Adewale Fayemi: Growing influence in Uganda’s oil industry
