2004 Seven Energy founded
2014 Temasek invested US$120m
2015 US$450m debt issue subsidiary Acugas
2017 Nigerian national oil company terminated SSA with Seven
2019 British group Savannah Energy finalised acquisition of Seven assets
Did Temasek wilfully, negligently, or foolishly, end up as the biggest shareholder in a company that was alleged to be partly owned by two suspected criminals who are said to have laundered stolen Nigerian oil funds through the company?
Seven Energy International Ltd is an indigenous Nigerian oil and gas exploration, development and production company with a focus on supplying gas to the domestic market. It is a holding company registered in Mauritius. In Nigeria, it operates under Septa Energy Nigeria Ltd which has since been renamed Seven Exploration and Production Limited.
Nigerian Petroleum Development Co (NPDC) acts like the state national oil company. It owns the onshore oil fields and contracts out to upstream oil companies under Strategic Alliance Agreements. These SAAs are agreements for cooperation among two or more independent firms to work together toward common objectives but they are not joint ventures. Septa received SAA for 3 fields in 2010. All oil production revenue goes to NPDC which then remits the percentages back to Septa.
Read BBC 9 Jan 2014 : Nigeria bank chief Sanusi told to resign by Goodluck Jonathan
On 25 Sep 2013 Lamido Sanusi, the Governor of the Central Bank of Nigeria, wrote a long letter to President Goodluck Jonathan. This letter was leaked and it was all over the media and internet. Sanusi laid out the bad stuff - serious corruption in the oil sector, plunder, missing US$20billion, money laudering etc. He fingered specifically 3 persons - former Nigeria Petroleum Minister Diezani Alison-Madueke and two prominent Nigerian businessmen and oil traders Jide Omokore and Kola Aluko. Aluko owns Atlantic Energy as well as CEO of Seven Energy. Omokore was chairman of Atlantic. Sanusi also highlight both Atlantic and Seven Energy have no capital, no expertise or experiece in oil production and questioned why they were given 5 SAAs. The president sacked Sanusi.
A lot of red flags were already on the internet at the time Temasek bought into the company in April 2014. Was it a case of sub-quality due diligence, or maybe, as seen again and again, a flamboyant and outwardly impressive company frontman Aluko has such persuasive influence. Many Chinese investors are in the African oil sector, but they are there living out the in the mud, the dangers and amongst the local operatives. They know how to make their calls. Can investments in such volatile business in such fluid states be safely managed in plush air-conditioned comfort thousands of miles away?
Poorly capitalised indigenous oil companies leveraged substantially heading into the oil price crash starting around Q3 of 2013. just before Temasek took up 15.5% of the equity of Seven Energy in April 2014. The floor was giving way when Temasek stepped in. Excellent timing.
The instability of the Nigerian currency, Naira, was already a known factor at the time of Temasek's investment decision. Since 2014 to 2020, the Naira has depreciated by 100%.
Seven was having problems of accumulated receivables due to issues of government subsidies on gas, inability to convert Naira to US$ for working capital, and the closure of Forcados export pipeline due to sabotage as the country faced high levels of industrial oil theft, as well as Islamist terrorist activities, such as Boko Harum.
Temasek made the investment in light of known liquidity, security, execution risks and naira convertibility issues.
In Jun 2015 Seven Energy subsidiary, Acugas Limited, had to take on US$495M debt in a bond issue which was listed in the Irish Stock Exchange. It is not known if Temasek participated in this. By 2016, the bond had dropped to junk status and Seven Energy was staring at bankruptcy proceedings. By 2017, having ran out of cash and thus unable to make payments to the state oil company under the SAA, the NPDC cancelled the SAA. Means Septa had no oil fields, no oil production revenue.
Seven Energy went into judicial administration in 2016 so as to restructure capital and negotiate with British oil company Savannah Energy to buy some of its assets. This transaction took a few years and was fully executed end 2019 recently. Savannah took over the 3 oil fields leaving Seven with basically only the gas distribution business under subsidiary Acugas Limited.
Jide Omokore, co businessman Kola Aluko and former Nigeria Petroleum Minister Diezani Alison-Madueke are currently being investigated for a series of multi-billion dollar fraud and money laundering offences in Nigeria, the United Kingdom and America. Seven Energy itself has not been accused of any wrong doing.
With main assets sold and the Naira depreciated by 100% since 2014, what is the value of Temasek's investment? We can't make any sense of the value as there is no current info on the company in the public domain. But it does'nt look good. The investment is basically dead man walking.
Poorly capitalised indigenous oil companies leveraged substantially heading into the oil price crash starting around Q3 of 2013. just before Temasek took up 15.5% of the equity of Seven Energy in April 2014. The floor was giving way when Temasek stepped in. Excellent timing.
The instability of the Nigerian currency, Naira, was already a known factor at the time of Temasek's investment decision. Since 2014 to 2020, the Naira has depreciated by 100%.
Seven was having problems of accumulated receivables due to issues of government subsidies on gas, inability to convert Naira to US$ for working capital, and the closure of Forcados export pipeline due to sabotage as the country faced high levels of industrial oil theft, as well as Islamist terrorist activities, such as Boko Harum.
Temasek made the investment in light of known liquidity, security, execution risks and naira convertibility issues.
In Jun 2015 Seven Energy subsidiary, Acugas Limited, had to take on US$495M debt in a bond issue which was listed in the Irish Stock Exchange. It is not known if Temasek participated in this. By 2016, the bond had dropped to junk status and Seven Energy was staring at bankruptcy proceedings. By 2017, having ran out of cash and thus unable to make payments to the state oil company under the SAA, the NPDC cancelled the SAA. Means Septa had no oil fields, no oil production revenue.
Seven Energy went into judicial administration in 2016 so as to restructure capital and negotiate with British oil company Savannah Energy to buy some of its assets. This transaction took a few years and was fully executed end 2019 recently. Savannah took over the 3 oil fields leaving Seven with basically only the gas distribution business under subsidiary Acugas Limited.
Jide Omokore, co businessman Kola Aluko and former Nigeria Petroleum Minister Diezani Alison-Madueke are currently being investigated for a series of multi-billion dollar fraud and money laundering offences in Nigeria, the United Kingdom and America. Seven Energy itself has not been accused of any wrong doing.
With main assets sold and the Naira depreciated by 100% since 2014, what is the value of Temasek's investment? We can't make any sense of the value as there is no current info on the company in the public domain. But it does'nt look good. The investment is basically dead man walking.
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Temasek's investments in oil companies has'nt been rosy. Check out other companies I have covered :
FTS International, Chesapeake,
Cheniere,
Kulun Energy,
Orchard Energy,
Venari Resources
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