Nigerian Oil Tycoon Swims Upstream And Down

Big moves in Nigeria's oil industry.

Nigerian tycoon Femi Otedola has obtained permission to acquire the power-generating unit of Forte Oil, the country’s third-largest marketer of petroleum products, after Total and Oando. Forte shareholders approved entry into negotiations for the proposed acquisition at an “extraordinary general meeting” in Lagos last month.

Otedola had previously been the largest shareholder in Forte Oil. He notified the Nigerian Stock Exchange last December that he would be divesting his 75% stake in the marketing company; his holding was subsequently purchased by Prudent Energy, a Nigerian oil trading firm, investing through Ignite Investments and Commodities. Prudent proceeded with plans to restructure Forte by divesting upstream operations to focus on marketing and distribution, and Otedola expressed interest in acquiring the power-generation subsidiary.

His strategy was spelled out in a December 24 notice from Forte: “Mr. Otedola’s divestment from the downstream business is pursuant to his decision to explore and maximise business opportunities in refining and petrochemicals.” The Forte Oil sale is expected to close in the first quarter of 2019.

Otedola is betting that his moves put him in the more profitable end of the oil business. “Refining is part of the value chain in the power industry and a little of the upstream,” says Pabina Yinkere, chief investment officer of Sigma Pensions in Lagos. “What he has enjoyed from power would have made him take this decision.”

One advantage of the switch is that Otedola will be investing in an already established company with strong value and distribution chain, Pabina says.

Otedola is CEO of Zenon Petroleum and Gas, a petroleum-products marketing and distribution firm, and currently chairman of Forte Oil. He joined Forbes’ list of the richest people in the world in 2009, ranked as 601st, and remained on the list through 2016. He was removed after a drop in the stock price of Forte Oil, which until 2010 was known as African Petroleum.