'I want to build a company to compete with the majors': Many investors are wary of oil and gas in the current environment, but as he tells African Business, Segun Adebutu, chairman and CEO of Nigeria's Petrolex, has big ambitions for his company in the sector.

Position:INTERVIEW: Segun Adebutu, Chairman and CEO, Petrolex - Interview
 
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The oil and gas sector has not been an easy one to operate in these last three years. A number of local companies have suffered from overpaying for assets when the price of oil was much higher, with a number of banks burnt by overexposure to the sector. Excess supply driven largely by the rise in shale production in the US has led to a fall from the giddy heights of $140/barrel a decade ago. The advent of electric cars and a general shift to renewable energy, experts predict, will also make its use less and less likely

However this is not the view held by Segun Adebutu, founder and chairman of Petrolex who has plans of investing over $5bn to build a fully integrated oil and gas operation in Ogun state, some 150 miles east of Lagos.

His rationale is simple. Right now Nigeria--and the rest of sub-Saharan Africa--imports most of the refined products it consumes and the transition to renewables will take a lot longer than we expect it to. "Oil and gas are cheaper than every other option at this moment," he says, "and I don't see anything drastically changing for the next quarter century as a cycle."

Ambition runs in the family

Adebutu comes from a well-to-do family in Nigeria, a family of businessmen with entrepreneurship at its very heart.

Adebutu's older brother has one of the largest oil palm plantations in West Africa and another brother runs a pig farm. His father, Kensington Adebutu, founded the country's most successful lottery and opened its first casino. He had competitors but his business stood the test of time. He was renowned for having built a business on strong fundamentals that would outlast a generation. Those are the values he passed on to his children and the ambitions of his son Segun: to build an oil and gas company to compete with the global international oil companies and outlive him.

Largest of its kind

Adebutu has invested over $330111 (a hybrid of equity and debt) in the tank farm, a 300m litre storage facility, the largest of its kind in sub-Saharan Africa. The investment was in local currency, which was his saving grace. Unlike the upstream business that is linked to the global price of the commodity, the tank farm and his planned mid and downstream operations are less exposed to the price of oil. It's a margins business he says.

He has secured an agreement with the NNPC (Nigeria's state owned oil company) for distribution and storage, and given his own needs (he will have 50 petrol stations by the end of the year...

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