Mark Tolley is describing flying in to visit an oil field in Pakistan's Indus
River flood plain. “We would arrive at Sukkur airport and would walk
outside, and there are these two twin-carb four-wheel drives with mounted
machine guns in the back, like you see in Iraq.
“You'd get halfway, and the driver would say: ‘Too much shellfire today.' Back
to the hotel, to drink warm beer all day, and try again next day. ‘How are
things?' ‘Rocket attack'.”
Which war was this? “It wasn't. This was just business as normal.” When was
it? “My career is so patchy. I forget. '96?”
It is said in the oil industry that one of God's little jokes was to position
most of the world's hydrocarbon reserves in areas prone to extreme political
instability. In three decades in that industry, Mr Tolley, a self-styled
“oil mercenary” and “global gypsy”, has worked in most of these. Pakistan
was not even the hairiest. That honour, as we shall see, goes to Nigeria.
Today he is based in Kiev as chief executive of Cadogan Petroleum, joining
this year as the company came to the Alternative Investment Market, raising
$270 million in the process. Cadogan has five licences to extract gas in
western and eastern Ukraine.
The first of these will start full production next month. Cadogan is now at
that interesting stage for any natural resources business when the heavy
investment has to go in and only thereafter do you find out if the reserves
are sufficient to justify it. Cadogan is also embroiled in one of those “who
owned what, when” disputes so typical of the former Soviet Union countries
with a former holder of two of the licences, which wants them back. It has
won in the Ukrainian courts and claims the backing of the Government, but
there is an appeal.
Ukraine's oil industry is probably 10 to 15 years behind its Russian
equivalent. The country could rely on heavily subsidised supplies of Russian
gas. There was no need to exploit its own reserves. Then came the “cold war”
between the two countries, and Mother Russia started to cut off supplies to
its turbulent former colony. Cadogan won its first licences in the winter of
2005. The price was a subsidised $50 per thousand cubic metre. In January
2006, Russia started to cut up rough. The price of gas in Ukraine nearly
doubled. It is now $178.
Mr Tolley grew up on a citrus farm in Renmark, South Australia, on the Murray
River, attending the small school there. Although the farm employed about 50
people, they were not especially well off. “I was driving a tractor from the
age of ten,” he says. The farm had 15 tractors and half a dozen trucks, and
he was involved in their maintenance from an even earlier age. He took a gap
year working on a farm in Queensland, “poor as poor — I'd pick three
pineapples and put them in a stream to cool until lunchtime. That was my
lunch.”
He then spent four years at the University of Adelaide studying mechanical
engineering. “At school I wasn't particularly bright — chemistry and physics
were a complete mystery. For some reason, after a year picking pineapples, I
started getting straight As in maths and chemistry.”
Hired by Santos, the Australian oil and gas company, on the university milk
round, he spent five years watching the business grow tenfold to a stage
when it employed 4,000 people. “The fun had gone out of it, it was a big
organisation with rules. You had to wear security badges, which I hate.”
He went to work for the Aussie buccaneer Alan Bond's oil business in Western
Australia. As he arrived in 1986, the oil price collapsed. “Fortunately Bond
had presold — he was fine.” In 1989 he was invited to join the Kuwait
Foreign Petroleum Exploration Company. “I thought, goodie, the Middle East,
lots of money, a bit of excitement.”
A bit too much. He arrived in Kuwait early in November 1989, flying his then
wife and three young boys in by Christmas. In August 1990 Saddam Hussein
invaded. “I was out of the country, due to fly back the day of the invasion.
It was a bit of a guessing game. An armed coup? Turned out to be a
full-scale war.”
An Australian Embassy worker came down from Baghdad to retrieve Mr Tolley's
family and they finally flew out on one of Richard Branson's flights.
Mr Tolley had been camped out with a colleague at the Amsterdam Hilton,
awaiting news from Kuwait, with 12kg of bacon in the hotel room mini-bar. “I
wonder what they thought.” He explains: “In Kuwait, whisky costs £200 a
bottle on the black market, and you buy it from someone on the back of a
sand dune. It's the same with bacon, has to be smuggled in. Expats had bacon
parties. As it turned out, that was a useful currency.”
He went to London with £60 in his pocket and the bacon. “I was out of a job.”
At a friend of a friend, he crashed on a couch. “I paid for the couch in
bacon.”
He found work with Kelt Energy, working on various gas fields in the UK and
abroad, including Nigeria, where he was project manager. “I was down there a
lot, got dysentery a couple of times. Very dark place, lot of guns, lot of
guns to the head.” He had to drive from Lagos up-country to Benin City, past
three or four checkpoints. “These bare-chested people would come out of the
undergrowth with machine guns. The driver said, ‘no worry, it's the
military'. No shoes, no boots — apparently he could tell the difference
between bandits and the military. It's the place I've been most scared in my
career.”
Nigeria was losing its appeal. Mr Tolley became interested in the emerging
post-Soviet oil and gas market. They employed only Russian speakers, so he
taught himself the language from books — not terribly well, he admits.
He found himself in Turkmenistan in the mid-1990s, in Ashkabad. “Broken
windows, broken toilet bowls, cockroaches, nothing working.” The oil field
was off Cheleken, on the Caspian. “It was like the part of Turkmenistan that
the former Soviet Union had forgot, and probably God had forgot as well. No
restaurants. No trees ...”
More recently he was developing the Upper Salyn Field in western Siberia for
Sibir Energy, the AIM-quoted Russian company most recently in the news for
an emergency property deal to bail out its biggest investors. Salyn was a
joint venture with Royal Dutch Shell but the work was being done by Sibir's
own crews. That job provided him with his closest brush with death.
He was living in Moscow and flying to the site each week. He took off from the
local airfield at Surgut in a Tupolev Tu-154, “a famous deathtrap”, and
settled back to sleep. “The stewardess woke me and told me to put on my
seatbelt as we were about to land. I looked out of the window, and we were
much lower than we should have been. Only one engine was going, and it was
popping and farting. We were back at Surgut again. We landed, and half the
crew decided to go home.”
You have to ask him, in all this talk about the Russian Wild East, about the
organised crime. “It's hard to distinguish what's mafia, what's government,
what's administration,” he says. “You can't avoid meeting them.”
He recalls one project in Ukraine, more than a decade back. “Half a dozen men
turned up, fedora hats, long black coats. ‘We're here to talk about oil.'
‘Oh, really?' They explained that I was going to exchange all our oil for
Cuban sugar. It took an hour of tea, cake and biscuits to explain that we
would love to help them. But we had presold all our oil.”
Today Mr Tolley is settled in Kiev with his second wife, a Ukrainian. Cadogan
today employs local people rather than foreign experts. The oil service
industry is relatively efficient and the population are better trained. “In
general, Soviet people are better educated than Westerners.”
He still hankers after the wild old days. “Two hundred expats. Three toilets.
Everybody got sick. It was a nightmare. No hot water in the middle of
winter. That was the charm.”
CV: Mark Tolley
Born: 1 October 1957.
1981 - 86: Santos, South Australia.
1986 - 89: Bond Petroleum, Western Australia.
1989 - 90: Kuwait Foreign Petroleum Exploration Company.
1990 - 93: Kelt UK.
1993 - 2001: Series of oil ventures in Turkmenistan, The Crimea,
Ukraine, Pakistan, Kazakhstan, Azerbaijan and elsewhere.
2001 - 2004: Sibir Energy, Russia.
2004 - 2008: Pechoraneft, Russia.
2008 - : Chief executive, Cadogan Petroelm.
Family: Married, three sons from previous marriage
