This is an audio transcript of the FT News Briefing podcast episode: ‘Berkshire after Buffett’
Kasia Broussalian
Good morning from the Financial Times. Today is Monday, May 5th, and this is your FT News Briefing. The Oracle of Omaha is retiring, and Chinese exporters are looking to avoid US tariffs. Plus, local companies are pouring into Nigeria’s onshore oil industry.
Aanu Adeoye
Maybe we could see Nigerians begin to take broader ownership of their economy.
Kasia Broussalian
I’m Kasia Broussalian and here’s the news you need to start your day.
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Warren Buffett plans to step down from Berkshire Hathaway after six decades. The world’s most famous investor made the announcement over the weekend at Berkshire’s annual shareholder meeting. And while we all knew it was coming — the man is 94 years old, after all — the news still came as a surprise, even for his handpicked successor, Greg Abel. The FT’s Amelia Pollard was in Omaha, Nebraska, to see it happen. Hi Amelia.
Amelia Pollard
Hi Kasha.
Kasia Broussalian
So, give me the details on how exactly Buffett’s announcement went down on Saturday.
Amelia Pollard
So, just to paint the scene a bit, the annual shareholder meeting is a complete festival. It lasts all weekend and on Friday, there are thousands of people in downtown Omaha. The Saturday meeting is a four-hour marathon question-and-answer session where Greg Abel and Buffett were both at the front of the arena. In the last five minutes, he says basically that there’s one other announcement he feels like he has to make.
Warren Buffett’s voice clip
Howie and Susie know of what I’m going to talk about there. The rest of them, this will come as news, too.
Amelia Pollard
And that the only people who were aware of this announcement are his two children, who both sit on the board. That even Greg Abel — who was sitting beside him — didn’t know what he was about to unveil.
Warren Buffett’s voice clip
The time has arrived where Greg should become the chief executive officer of the company at year end. And I want to spring that on the directors effectively, and then…
Kasia Broussalian
Well, Amelia, what is it about Buffett that made him such a mythical figure in the investment world?
Amelia Pollard
Yeah, so Buffett’s often called the Oracle of Omaha, and he’s not only one of the savviest investors of all time, he’s managed to build Berkshire Hathaway into a $1.1tn company. But he also is one of these figures that investors look to for not just financial advice but also advice on how to lead one’s life. He often was answering questions about, you know, how people should fill their days.
And Jamie Dimon wrote to us saying that he represents the very best of American capitalism. Buffett is someone who really values long-term investments and long-term growth, which is all the rarer nowadays in the US.
Kasia Broussalian
And carrying on this major legacy, it looks like it’s gonna fall on the shoulders of Greg Abel. Tell me more about him.
Amelia Pollard
So, Greg Abel is the vice chair of non-insurance operations. And a lot of the shareholders I spoke to on Saturday said that they had supreme confidence in him. And I think that Buffett’s blessing of Greg means a huge amount to investors who’ve been with the company for decades. But that being said, you know, there will be a lot of public scrutiny on how Greg performs. Buffett is a legendary figure and larger-than-life figure. And I think there’s some question whether Berkshire Hathaway will ever be the same without Buffett.
Kasia Broussalian
So now, besides the difficulty of filling Buffett’s shoes, what major challenges lie ahead for Abel as Berkshire’s CEO?
Amelia Pollard
So, Berkshire has amassed a huge amount of cash in recent years and Berkshire and Buffett really don’t want to pay more than companies are worth. And so they’re very strategic and waiting on the sidelines for when they can strike and buy up companies and make savvy investments when things are cheap.
And so, Abel’s basically handed hundreds of billions of dollars in cash that shareholders would like him to deploy. That’s been some criticism in recent years of, you know, is Buffett being too cautious and spending this money? So the real question is whether he’ll be able to find, you know, those great deals and great investments in the years to come.
Kasia Broussalian
Amelia Pollard is the FT’s US deals in activism correspondent. Thanks Amelia.
Amelia Pollard
Thanks so much for having me.
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Kasia Broussalian
Chinese exporters have found a way to get around President Donald Trump’s sky-high tariffs. They’re shipping goods through third countries to hide where they really come from. That way, they won’t face upwards of 145 per cent tariffs when they arrive at US ports. It’s called place of origin washing, and Chinese social media is chock-full of advertisements offering to help companies through the process. Lots of the ads are suggesting south-east Asia as the place to do it. But countries in the region are trying to crack down on the practise. Both Thailand and Vietnam recently announced new measures to police these foreign goods.
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The Israeli military said on Sunday that it was calling up thousands of reservists. Many of them are now in the process of being deployed. Israel is looking to expand its offensive in Gaza. It’s the latest escalation since the country broke a fragile ceasefire with Hamas two months ago. Since then, Israel has cut off supplies of food, fuel, and medicine to the more than two million Palestinians living in the enclave. Tensions in the region are high. Also on Sunday, Iranian-backed Houthi militants fired a missile from Yemen. It landed near Israel’s main airport. The attack injured at least four people and disrupted flights.
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Nigeria’s onshore oil industry has been dominated by foreign players for a while now. Think ExxonMobil out of the US, Italy’s Eni, and of course, Shell, the Anglo-Dutch major. But more and more, these big firms are getting out and local companies are taking over their assets.
My colleague Aanu Adeoye has been reporting on the transition and he’s here with me now. Hey, Aanu.
Aanu Adeoye
Hi.
Kasia Broussalian
So walk me through the shift in Nigeria’s oil industry. Why are these international majors pulling out?
Aanu Adeoye
International majors have dominated Nigeria’s onshore oil industry for decades now, but over the last three to four years, we are starting to see a shift in this industry. This is for a variety of reasons. One of them is because there has been dwindling returns from these oilfields that have been exploited for decades now. There’s also been long-standing concerns about environmental damage and oil theft. And there’s always been tensions with communities — Nigerian communities where these oil assets reside have long had grievances against these foreign majors for not looking out for their own interests. And so for these reasons, the foreign majors have decided that they’ve had enough and are starting to shift their operations elsewhere.
Kasia Broussalian
Yeah, and it sounds like local entities are now filling that gap. Can you give me some examples of that?
Aanu Adeoye
So, ExxonMobil from the US have sold their assets in the past year to a London and Lagos-listed company called Seplat Energy. Italy’s Eni has sold its Nigerian arm to Oando, which is a Nigerian company listed in Lagos and Johannesburg. And perhaps the most important divestment has come from Shell because Shell drilled Nigeria’s first oil well in 1956 and has been synonymous with Nigeria’s oil industry for decades. And Shell disposed of its onshore business for $1.3bn in a transaction that was completed just this year. So we’ve seen these big players exit and are selling up to domestic Nigerian companies.
Kasia Broussalian
Now, you mentioned that these foreign majors that have been in the country for decades, they also have had quite a few tensions with local communities, what has that looked like?
Aanu Adeoye
Yes, I mean, the number one problem has always been their reaction and their responsibility towards oil spills, right? So this is kind of the main problem that they’ve had with local communities, because a lot of the people living in these areas are rural people who work in farming and fishing. And when there’s oil spillages, it obviously affects their means of livelihoods. There’s also been problems of environmental damage, which is a second-order effect from oil spills. So we’ve had these tensions basically since the beginning of Nigeria’s oil industry in the 1950s.
Kasia Broussalian
So it sounds like local communities have many times been harmed over the years, are Nigerian owners planning to do things differently?
Aanu Adeoye
So that’s the big question. And at this point, it’s too early to judge because they have only started taking ownership of these assets. But there’s a new landmark law in Nigeria called the Petroleum Industry Act that was signed into law in 2021, just as the oil majors were preparing to leave, that says that companies operating in local communities have to pay a certain percentage of their annual operating expenses towards the development of those communities. And one of the oil executives I spoke to said they hope that this will better improve the relationship between the host communities and the domestic companies that are coming into the areas now.
Kasia Broussalian
All right, so maybe it’s a step in the right direction, but ultimately, how big of a deal is this change in ownership for Nigeria’s broader economy?
Aanu Adeoye
I think it’s massive, you know, because oil is very important to the Nigerian national psyche. It employs quite a lot of people, but also contributes massively to government revenue and to Nigeria’s export earnings. You know, this is what Nigeria mostly exports to the rest of the world. And if you have Nigerian companies coming into this and taking local ownership of this, there is a sense that you know you could perhaps see this effect spread into other industries.
Maybe we could see Nigerians begin to take broader ownership of their economy while also trying to attract foreign investors in key sectors. So I think this is quite important for Nigeria, particularly psychologically, that local companies are taking over these assets.
Kasia Broussalian
Aanu Adeoye is the FT’s West Africa correspondent. Thanks, Aanu.
Aanu Adeoye
Thanks for having me.
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Kasia Broussalian
You can read more on all of these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.
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