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Furore Over Heritage’s Oil Bloc  print

Published on January 21, 2013 by   ·   1 Comment

Criticisms trail sale of strategic OML 30 oil bloc by Royal Dutch Shell to Heritage Oil, majorly owned by Tony Buckingham, alleged to be once a mercenary in Africa’s civil wars

BY TAYO  ODUNLAMI

Tony Buckingham: his questionable past catching up with him?

Tony Buckingham: his questionable past catching up with him?

Heritage Oil has suddenly become the most controversial feature in the Nigerian oil industry since last November when it confirmed the acquisition of a cache of oil fields in the country. Heritage, in partnership with Shoreline Power, has purchased eight producing fields from Royal Dutch Shell, Total of France and ENI of Italy, which were divesting their 45 per cent stake from OML 30 in the conflict-prone Niger Delta. The Nigerian National Petroleum Corporation, NNPC, controls the remaining 55 per cent.

Heritage is arriving Nigeria trailed by so much baggage attached to its majority owner and Chief Executive Officer, Anthony Leslie Rowland Buckingham, globally known in business circles as Tony Buckingham, and simply Tony to his friends. Many groups, labour unions and individuals in Nigeria have been kicking against the sale of OML 30 to Heritage, alleging the federal government and NNPC failed to conduct due diligence on Tony’s business and professional past, which is considered very cloudy. The Trade Union Congress, TUC, particularly is prodding President Goodluck Jonathan and the Minister of Petroleum Resources, Mrs. Diezani Alison-Maduekwe to withdraw the licence given Heritage. TUC’s president, Peter Esele argued that the sale of OML 30 to Heritage Oil reduced Nigeria to a “laughing stock in Europe”.

Critics wondered how Shell could shun reputable indigenous firms like Conoil plc and Oando plc, which also bid to buy the oil bloc, in favour of a foreign firm owned by what they called a questionable character in African affairs. Isaac Aberarem, Secretary-General of the National Union of Petroleum and Natural Gas Workers, NUPENG, declared that “any competitive bidding process that led to the emergence of a disreputable firm ahould be investigated. We have to examine how such companies and persons emerged.” Esele also thundered: “It takes a dodgy country to sell its assets to a Briton with a dodgy character ahead of other competent, if not other more competent, bidders. At the level we are now, it is not even safe for the industry to bring in persons with questionable character. The entire divestment programme of Shell, it appears,  is being handled by Shell and for Shell.”

But Shell’s spokesperson, Precious Okolobo, responded that “the OML transaction was undertaken in compliance with applicable regulations and in accordance with the law.”  The Heritage Oil management has also reacted to the allegations. It asserted that details of the transaction were fully disclosed when the deal was signed and that final approval has been granted by government.

Tony’s sin mainly is his alleged links with Executives Outcomes, a crack group of commandos comprising mainly former members of the South African Defence Force, SADF, with proven record of mercenary operations in countries across Africa. Born in 1951, Tony, a Briton and wealthiest man in the isle of Jersey, is a former British Special Air Service, SAS, officer and former member of the Special Boat Service, which became involved in the oil business in 1972 as a North Sea diver and later a concession negotiator for both Ranger Oil and Premier Oil in the 1980s. By 1989, he had become an adviser to the Angolan government under Jose Eduardo dos Santos, assisting the administration to establish the oil ministry and set up Sonangol, its oil exploration and production company. He was said to have made a big fortune from oil prospecting and production in Uganda’s Lake Albert fields and in 2009, sold his company’s assets and interest to ENI Oil, the Italian oil giant, for $1.3 billion.

In 1992, Tony set up his own Heritage company and has since built a multi-billion dollar oil business empire across the world, with interests and assets in Russia, Libya, Iraq, Malta, Oman, Congo, Mali, Pakistan and now Nigeria. But Tony’s past has stuck with him, as the world hold his alleged activities as a mercenary and arms contractor against him.

When, in 1994, communist UNITA rebels overran oil operations in Angola, including Heritage’s oil interest, Tony was said to have teamed up with Simon Mann and Lt-Col. Eeben Barlow to use Executive Outcomes to battle the rebels and retrieve his oil assets. Mann, heir to the Watney Mann brewing fortune, was jailed for more than 34 years for leading an attempt to oust Teodoro Obiang Nguema, the president of oil-rich Equatorial Guinea in March 2004. He was granted presidential pardon on humanitarian grounds in November 2009.

Tony was alleged to be directly involved in mercenary activities in other parts of Africa, including Sierra Leone. In 1995, the Sierra Leonian government contracted Executive Outcomes to help train its army and fight rebel forces. He was also alleged to be a principal figure in another mercenary outfit, Sandline, founded in 1996 by Tim Spicer, a retired British colonel, which was hired to organise a counter-coup against soldiers who toppled the government of President Ahmad Tejan Kabbah of Sierra Leone. Sandline was allegedly contracted for the job by Indian financier, Rakesh Saxena, in return for diamond exploration permits.

Sandline was accused of breaking a United Nations arms embargo on Sierra Leone with the tacit support of the British government. The scandal implicated the Foreign Office in arms sale organised by Sandline and Executive Outcomes, two companies that shared offices in 535 King’s Road, London. Sandline was also engaged by the government of Papua New Guinea to suppress the Bougainville Revolutionary Army, which was seeking independence from the country. An enquiry by the Papua New Guinea Commission of Enquiry into the mercenary group’s contract later determined that Tony and Spicer were Sandline’s chief controllers. Sandline and Executive Outcomes were dissolved in 2004 and 2009 respectively.

Tony was chief executive officer of Sky Gem, a mining company given diamond prospecting rights for the Neu Schwaben by the Namibian government. Sky Gem was accused of forcefully ejecting over 1,000 small-time miners who had been operating on the farm for years.

Heritage, which strives in its prospectus to absolve Tony of the mercenary allegations, claims he had severed links with Mann in 2000. But linked to Logo Limited, the company used by Mann in buying military equipment and ammunition and paying mercenaries, are Hansard Trust Company Ltd and Hansard Management, two companies which both have shares in four of the companies in the Heritage Group. Logo Limited shared offices with the Hansard companies at St. Peter Port as late as 2009

In 2007, The Observer of London said of Executive Outcomes and Sandline: “They are the advance guard for major business interests engaged in a latter-day scramble for the mineral wealth of Africa (including) oil, gold and diamond-mining ventures… and offshore financial management services.” The Sunday Times once put Tony, who owns 33 per cent shares in Heritage, “at the epicentre of the trade in arms and soldiers… into war-torn African states”.

In Uganda, Heritage Oil is also experiencing the citizens’ ire. The Ugandan government is claiming over $400mn in taxes from the company. The dispute dates back to Heritage Oil’s sale of rights to two oil blocs in Uganda’s Lake Albert region to the UK-listed Tullow Oil in July 2010. The Ugandan Revenue Authority claims Heritage Oil owes $430mn in capital gains tax from the $1.45bn sale. The Uganda Tax Appeals tribunal, before which the case was taken, ruled in favour of the government. But Heritage is disagreeing; it has headed to a London arbitration panel, which has been hearing the case behind closed doors since last year.

Ugandans are apprehensive of the outcome. “Ugandans do not understand why their government is being forced to spend millions of pounds on a tax dispute thousands of miles away in London when it has already been decided by Uganda’s courts,” said Dickens Kamugisha, chairman of the Oil Watch Coalition of non-governmental organisations. “They understand even less why the dispute is taking place behind closed doors and this secrecy is making them deeply mistrustful.” George Boden, a campaigner at Global Witness added: “If Heritage Oil wins this case and avoid paying tax, there will be a deep sense of injustice in Uganda for many years to come.”

It is a similar pang of antagonism that Heritage is facing in Nigeria, even it is not yet over tax infractions. Tony, it was learnt, had long been making spirited efforts to key into Nigeria’s military and oil & gas businesses but had been shunned – until his success last year. It was understood that before its successful partnership with Shoreline, Heritage had, as far back as 2003, been sending representatives to Nigeria to explore investment opportunities. It was, however, not until 2005 that it was able to make a bid through former Green Eagles player, Folorunso Okenla. Okenla, who admitted he didn’t conduct any real due diligence on Heritage, disclosed that he got to know the energy firm in Uganda.

So he contacted Tony. Subsequently, Okenla’s company, Haoni Oil and Gas, partnered with Heritage in the 2005 bidding round in Abuja but failed. “I brought Heritage into Nigeria,” Okenla said. “What we were looking at was to be the local partner to Heritage, which was already a big oil industry player in Uganda. Our first business relationship with Heritage was in 2005 when Haoni Oil and Gas partnered with them during the 2005 bidding round in Abuja but we did not succeed,” the ex–footballer stated.

Apart from Haoni, other companies that Heritage explored business relationships with in Nigeria included Hicog Oil and Gas, Eurasia Limited and ENP Limited.

It was, however, Kola Karim’s Shoreline Power Resources that Heritage eventually struck oil, in a manner of speaking, with using Shoreline Natural Resources Limited as a special purpose company. The $850mn deal in Nigeria means that Heritage takes over 45 per cent of OML 30 with eight producing fields, some 200 wells, along with associated infrastructure that include a segment of the 850,000 barrels per day capacity Trans Forcados pipeline. The acquisition, according to a statement by Heritage, is being financed by a $550mn secured bridge finance facility provided by Standard Bank of South Africa and a $370mn underwritten rights issue sponsored by JP Morgan Securities Limited.

Karim, chief executive officer of Shoreline Energy International, is patron of the Lagos Polo Club and has extensive business interests in Costain, the United Kingdom support services group, and Schlumberger, the United States-based oil services company. Shoreline’s engagements span construction, power generation, engineering and telecoms across sub-Sahara Africa. Karim was beside himself at the acquisition. “Taking us into the upstream oil and gas sector at such a significant time when the Nigerian government is promoting active participation from indigenous companies, Shoreline, along with Heritage’s strong technical team and upstream experience will become one of the leading indigenous oil producing companies in Nigeria. This will strengthen our existing network of relationships with the local communities, local government and authorities in the oil producing areas of Nigeria,” Karim was quoted as saying.

Tony also mused: “The acquisition of OML 30 is transformational for Heritage, providing a material change in production and reserves while pursuing our strategy of generating shareholder value. Heritage is very excited to be participating in the development of OML 30 and entering at an attractive valuation. We look forward to continuing to build local relationships and partnerships with the communities in the Delta region and creating a platform to build a substantial presence in Nigeria.”

The Heritage group seems not unconscious of the global criticisms against Heritage. In 2008, at the listing of the Heritage stock on the London Stock Exchange, its prospectus said: “There has been, from time to time and may periodically be in the future, media and other public speculation about the chief executive officer’s associations with private military contractors and/or individuals involved with those types of companies.”

In Nigeria, those speculations are just beginning. How they will affect Heritage Oil’s arrival into the juicy, but dirty Nigeria’s oil industry and business remains to be seen.

.This article originally appeared in TheNEWS magazine of 28 January 2013

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Posted by on January 21, 2013, 2:12 pm. Filed under Business, Business News, Electricity, Oil and Gas. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

1 Comment for “Furore Over Heritage’s Oil Bloc”

  1. Andy

    We need people like this to help sanitize the oil industry. Tony does not take nonsense and that is why the labour guys are afraid of him. With Tony onboard the era of unreasonable demands by oil community and labour is gone forever. The law is there to manage excesses from Heritage we need not be afraid of anything. Afterall Shell has right to sell its properties to the highest bidder. If Conoil could pay more why not. Please we need Heritage oil and give them just two years to sanitize the creeks and get rids of oil thiefs.

  2. Tiger

    Heritage is doing a business. Shell has sold its business to Heritage. I do not understand why the Furore? Although not a great Fan of Tony’s ways of running his business, he is helping local people, creating jobs and doing charitable work. By all counts he looks a good human being and a businessman. But what he has not done is created shareholder value.

    Its stock once at above £5 languishes below £2 and was at one time was even around £1. I myself am a holder at around £3.50. So he should speak what he can do.

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