Delonex Energy Limited , a new, world-class energy exploration and production (E&P) company which has set its sights on Central and East Africa, announced on June 17 that Warburg Pincus, a global private equity firm focused on growth investments, has agreed to invest upto USD 600 million in the Company for gas and oil exploration in the specified regions.
Delonex’s team has been quite successful in conducting drilling operations in various Asian countries, resulting in the first hydrocarbon discoveries in the Mannar Basin in Sri Lanka, unearthing oil and gas in often remote onshore and offshore sites in South East Asian countries like Indonesia, Thailand and Malaysia and has revealed the full potential of the Barmer Basin in Rajasthan, western India, establishing 1.7 billion barrels oil equivalent recoverable resource base.
The Company has considerable interest in strategic areas like the East African Continental Rift System, which extends from the Red Sea through Ethiopia, Kenya, Uganda and Tanzania to Mozambique, the Central African Rift System stretching from Chad to South Sudan, and the coastal areas of East Africa. The regions were selected for investment due to the fact that they recently have become hot property for energy investors following the discoveries of gas in Mozambique and Tanzania, and other hydrocarbon findings in Uganda and Kenya.
Delonex Energy plans on gaining access to these areas through farm-in and direct awards from host governments to conduct explorations and to create the opportunity for significant discoveries. Along with their vast knowledge and experience of Africa and a successful track record in similar basins around the world, the planned exploration is expected to be a promising one, as stated by third parties.
Delonex Energy Limited is led by Chief Executive Rahul Dhir, former CEO of Cairn India Ltd, where he was working from its inception through its 2 billion initial public offering (IPO) and sale to Vedanta Resources Plc. Recently, Dhir also became an executive-in residence at Warburg Pincus, where he worked in collaboration with the firm over the past several months to formulate Delonex’s business plan. Warburg Pincus has more than USD 40 billion in assets under management.
Rahul Dhir spoke to Capital’s Eskedar Kifle on issues concerning the company’s plans to explore for gas and oil in East and Central Africa, particularly in Ethiopia.
Capital: Tell us about Delonex Energy and what you are trying to do in general?
Rahul Dhir: We are building a world-class oil and gas exploration and production company which is particularly focused on East and Central Africa and we are really excited about the potential in those areas. There is a tremendous amount of undiscovered potential in those areas and my team and I have amassed considerable experience working in similar geological incubations. The company has the technology and capital to unlock these hydrocarbon resources and create value for the host countries.
We had been working at a company called Cairn India Limited, where production levels reached more than 200,000 barrels of oil per day. So we come with a lot of experience and have worked in diverse environments and with different communities around the world. We are very pleased and very excited that Warburg Pincus, a global private equity firm, has supported us and we believe we are one of the best companies to work with in this region.
Our team has a proven track record of delivering results: our success in India helped reduce the country’s oil imports by approximately USD 14 billion and contributed around USD 6 billion to the Indian Exchequer.
Capital: Where is your company located and where in Africa you have invested before??
Dhir: Delonex is a British company and it is headquartered in London. We have an office in India, as well as a regional office located in Nairobi, Kenya.
It is obviously early days for us; we just announced recently that Warburg Pincus, a global private equity firm focused on growth investments, has agreed to invest upto USD 600 million in the Company. Our focus is largely going to be in Ethiopia, Kenya, Uganda and Central Africa. These countries are our focus areas.
Capital: Why do you have so much interest in East and Central Africa? Do you think there is a huge potential in these areas?
Dhir: I think I would say more generally that the region is still in its early days of exploration. If you take the entire region starting from Central Africa, Chad, South Sudan and Ethiopia down to Mozambique, since the early 1900s only about six hundred exploration wells have been drilled.
This shows that the area has really not been explored well and effectively.
Capital: Do you believe Ethiopia has a big oil and gas potential?
Dhir: As you know, in Ethiopia the number of wells drilled for oil and gas explorations is particularly minimal. We believe that, with the application of modern technological techniques and new drilling techniques, the potential can be tested and hopefully there will be a significant discovery to be made.
Capital: Other companies are already operating in Ethiopia and are currently exploring for gas and oil. What makes your company different than them?
Dhir: What our team brings to the table is tremendous experience in working elsewhere, like in South Asia and South East Asia. Our experience in drilling wells and commercializing discoveries in remote parts of the world are our greatest assets. We have a proven track record of having done that.
Having the ability to invest USD 600 million puts us in a better position and able to compete with other companies with sufficient funds. We feel it is a combination of good understanding of Geoscience, great experience, a strong track record of discoveries, the development and commercializing of those discoveries coupled with a very strong financial base, which makes us different. That is what sets us apart.
Capital: Out of the stated amount, how much are you planning to invest in Ethiopia?
Dhir: I think it is difficult to say at this stage or time, but we certainly hope that with success we should be able to invest a significant amount in Ethiopia.
Capital: Could you give me at least a rough estimate on how much you are willing to invest?
Dhir: I think it really is premature to say, but as we get a better sense of everything, I am sure we will be able to provide you with the figures, but at this point it is just too early to say.
Capital: Have you been in contact with the Ethiopian government to discuss your plans to operate in the country?
Dhir: What we are doing right now is systematically building relationships across the region. We are meeting with different companies and governments in the countries we are focusing on. That is a process we are undergoing right now. We are just starting out.