‘Global is ready to partner Nigeria to energise its tremendous potential’
Kenneth Yellowe founded Global Energy Group, an international oil and gas holding company comprised of Global Energy Inc, Global Gas and Refining Limited, and Global Energy USA Inc Yellowe currently serves as its chairman/CEO, in Houston, Texas.
Global’s Nigerian operations, Global Gas and Refining Limited, the result of Yellowe’s vision, became the first indigenous and independent gas processing, LPG producer and marketing company in the country. The company currently has an existing gas processing agreement with the Ministry of Petroleum Resources of Nigeria for the construction of infrastructure and supply of natural gas to GGRL for the Eastern Gas Grid. BusinessDay’s PATRICK ATUANYA had a wide ranging discussion with the CEO. Excerpts:
Why did you decide to invest in Nigeria
Iam a Nigerian who believes in the potential and promise of this country.
In a free-market economy, the government should not be the driver for the energy and power businesses. The role of government is to establish enabling environments, policies, and institutions whereby an entrepreneur such as me can create an indigenous natural gas business which serves the needs of the people in Nigeria.
There is tremendous power when a normal individual such as me can create a company from the ground up, approach a major energy company such as Shell, Chevron, or Exxon, or a Nigerian indigenous upstream energy company and conduct business through transporting, liquefying, barging, piping, and trucking gas which will serve as power for other Nigerian businesses and consumers.
To correct some of the assumptions that Nigerians cannot do these things right is the major reason why I decided to invest here in my country of birth, Nigeria.
Talking about your company I understand that Shell reneged in their agreement with you, what is the situation now
I will not get into too much detail on the Shell situation since we are currently in arbitration at the International Chamber of Commercial Court (ICC) in Paris which is going very well for Global, because the gas agreement is very clear about obligation of the parties. The agreement was between Global Gas and Refining Ltd and Shell Petroleum Development Company of Nigeria Ltd, in a joint-venture comprised of Shell and the government where Global would process Shell-supplied gas for domestic consumption benefitting the people of Nigeria.
The assets in this case are close to shore; meaning it is an immediate low-hanging opportunity for the Nigerian governments and Nigerian states to deliver gas from these assets as fuel for power plants and other domestic consumers. Instead of honoring their agreement, Shell deliberately did not supply gas to Global’s gas processing facility at Cawthorne Channel. Shell attempted to sell the block and revenue-producing assets, not honoring their agreement. I remain optimistic that this government will intervene and resolve the matter, but it should have never happened in the first place.
Shell is the equivalent of and can be compared to a farmer who has hungry children and yet sells every crop he produces on the international market. In this case, 170 million people don’t have adequate power, and the country is barely producing about 4000 megawatts of power. Had Shell honored the contract they signed with Global, Global would have been able to deliver an affordable supply of gas for power applications to energise human potential in this beautiful country.
You invested so much into this business, so what is the situation on ground
My brother this is the most horrible experience. This is really a very sad situation for Global or any business venture to find themselves in, because we have investors, shareholders, banks, hundreds of employees, host communities and other stakeholders who have invested time, money and efforts in a project of this magnitude only to have their investment frustrated in this manner.
It is hoped that the Nigerian government can intervene in the interest of the public, because Global was directly impacting the lives of everyday Nigerians. The government should protect the business interests of Global, because we are truly committed to making a difference in this country. We need the government to make sure investors who summon the interest and courage to build Nigeria are protected and rewarded.
How much did you invest
Our investment in the project is in excess of $300 million of capital invested in real infrastructure and capital expenditures.
Actually, our FPSO the “MS Symphony” named after my youngest daughter, valued at about $68 million, was retrofitted in Singapore and sailed to Nigeria for our gas projec
Due to the insecurity in the region, on July 25th, 2008, the vessel was attacked by hoodlums, claiming to be militants. They went aboard our vessel, took eight of our expatriates hostage, and even shot some of the experts in the process. Completely looted everything of value on the vessel and vandalized the entire FPSO. The incident was reported on CNN when it happened.
Global’s situation was further compounded after we invested additional $25 million to refurbish and restart our operations in 2009, after receiving numerous assurances from Shell of reliable gas supply to our plant, which they never kept. We were then left with no other choice but to finally shut down operations and eventually abandoned the facilities in December of 2010.
However, I still have faith that everything will work out just fine at the end for Global, because natural gas is truly the fuel of Nigeria’s economic renaissance. In the end, history has shown that it is not the decisions of a big corporation or a government which creates the most change; most change is brought about by the individual. Every Nigerian who chooses to use domestically processed gas for power chooses to change the history of Nigeria. There is enormous benefit in utilizing Nigeria’s gas for the benefit of the country and Nigerian people. If we are able to process gas to increase our power production in the country, I am confident Nigerians will drive the economic growth of this blessed nation.
What is your take on the Petroleum Industry Bill
Quite frankly, the PIB like any other policy for Nigerians, should be a reflection of the will of the people and our readiness to climb the ladder of development. Based on where we are right now in terms of our development as a people, I personally do not think that Nigerians are ready for the PIB in its currently drafted form at this point.
Policy which strengthens the foundation of free-market enterprise is what we need. We are in a situation where individuals with no experience in the oil and gas industry are awarded huge oil blocks, with huge reserves, and shockingly don’t even know where these oil blocks are located, and someone with the stroke of a pen awards an oil block; creating instant billionaires, something is wrong. These instant billionaires go around telling people that they are so rich and don’t know what to do with money in a poor country like Nigeria? Something is definitely wrong! They don’t know what it takes to become rich, and they don’t know what it takes to grow wealth in this country or in any economy for that matter. This wealth comes from assets that belong to the commonwealth and the people, and for it to be privatised and or given away to an individual without a formal transparent, competitive bid process is just plain wrong.
What of the low cost of oil
The low cost of oil is not viable right now.
I am 52 years old, and I have never, not one single time since I was growing up, come back to Nigeria and not seen a long queue of people waiting to buy petroleum products during holiday seasons or abject poverty at every turn you make.
Nigeria is truly at a crossroads, and in terms of development, it must decide what type of country it wants to be. It can be like the USA, where government is considered a good, vital, and needed pillar of our society. The country can create and honour laws which enable investors to risk capital, and it can clearly outline corporate property rights, institute a system of law and order, ensure bankruptcy protection, and govern commercial transactions.
Or Nigeria can be like Russia, where corruption has sabotaged any hope for sustainable economic development other than existing as a petro-state.
Russia’s oil revenue is monopolised by a tiny elite of well-connected political insiders, and the fortunes of the country rise and fall depending on the price of oil. Some estimates show that Nigeria has lost over $380 billion from corruption since its independence in 1960 – almost the same as it has received in foreign aid – and it continually loses almost $8 billion annually from this corruption.
The country cannot grow fast without zero tolerance for corruption. Global is ready to partner with Nigeria to energise human potential and to move this country further.