Oando PLC, Nigeria’s leading indigenous energy solutions provider, has announced the successful acquisition of Eni’s Nigerian subsidiary, Nigerian Agip Oil Company (NAOC).
This significant milestone, achieved in a signing ceremony in London, marks a new era for the Nigerian energy sector.
It’s a watershed moment for indigenous players like Oando who 68 years after the discovery of oil in Oloibiri are now poised to lead and operate oil and gas assets previously dominated by International Oil Companies The transaction, first announced in September 2023, promises a brighter future for the company and industry alike.
It is rather uncanny that this acquisition comes exactly a decade after Oando’s landmark $1.8 billion acquisition of ConocoPhillips’ Nigeria interest, a transaction which incidentally made the company a Joint Venture (JV) partner on the asset alongside NNPC E&P Ltd (NEPL) and NAOC. The ConocoPhillips transaction propelled Oando’s production from approximately 4,500 barrels of oil per day to 50,000 barrels of oil per day at the time.
Speaking on NAOC’s acquisition, the Group Chief Executive of Oando PLC, Wale Tinubu, said
“Today’s announcement is the culmination of ten years of hard work, resilience, and an unwavering belief that we would realise our ambition. It is a win, not just for Oando, but for every indigenous energy player as we take our destiny in our hands. This is a new dawn for the Nigerian energy sector, and we are confident that indigenous companies will play a pivotal role in this next phase of the nation’s upstream evolution. With our assumption of the role of operator, our immediate focus is on optimizing the assets’ immense potential in contributing to our strategic objectives, whilst complementing the nation’s plan to boost production outputs.
Looking to the future, we will continue to pursue strategic opportunities that provide enhanced growth and value creation for our stakeholders, particularly in clean energy, agri-feedstock sector, as well as infrastructure and mining.”
The transaction increases Oando’s current participating interests in OMLs 60, 61, 62, and 63 from 20% to 40% and increases Oando’s ownership stake in the Joint Venture assets and infrastructure which include forty discovered oil and gas fields, of which twenty-four are currently producing, approximately forty identified prospects and leads, twelve production stations, approximately 1,490 km of pipelines, three gas processing plants, the Brass River Oil Terminal, the Kwale-Okpai phases 1 & 2 power plants (with a total nameplate capacity of 960MW), and associated infrastructure.
Furthermore, it’ll significantly boost the company’s production reserves which currently stands at 505.6MMboe to 1.0Bnboe.
In the last decade, international oil companies operating in Nigeria have pursued divestment strategies, focusing on exiting shallow water and onshore assets while maintaining interests in the deep waters. The trend indicates an IOC exodus from mature African basins, driven by factors such as declining production and increasing operational risks.
This is leading to a shift towards frontiers like Namibia and Guyana, where there are opportunities for less carbon-intensive projects and less risky offshore developments. Nigerian oil production has fallen well below its capacity of over 2 million b/d of crude and condensate due to rampant oil theft and sabotage in the restive Niger Delta, as well as underinvestment and sluggish exploration activity. The country produced 1.47 million b/d in May 2024, according to the Platts OPEC Survey from S&P Global Commodity Insights.
Speaking in an interview with S & P Global Commodity Insights, Dr Ainojie Irune, Executive Director, Oando PLC & Chief Operating Officer, Oando Energy Resources, suggested that indigenous companies are well placed to rejuvenate the sector. He said: “If you look at the local companies that have stepped forward… there’s no doubt that indigenous capacity exists.”
Given the successful completion of Eni’s divestment to Oando, which has set an industry precedent, we anticipate further asset divestments as other indigenous players intensify efforts to fulfil the requisite regulatory, financial and contractual conditions for transaction completion. Seplat Energy, in February 2022, announced an agreement for the acquisition of ExxonMobil’s entire share in its shallow water business — Mobil Producing Nigeria Unlimited (MPNU), while indigenous player Chappal Energies in November 2023 announced that it had entered into a sale agreement with Norwegian oil company Equinor for its Nigerian entity, while Shell agreed to sell its Nigerian onshore subsidiary, the Shell Petroleum Development Company of Nigeria Limited (SPDC), to Renaissance Consortium for $2.4 billion, to name a few.
These divestment deals are expected to bring in fresh capital, technology, and expertise, which will help to increase oil production, reduce carbon emissions, and create new opportunities for Nigerians in the industry. Indigenous companies possess a distinct advantage in terms of local knowledge, operational flexibility, and community relations. When coupled with global best practices, this advantage offers unparalleled opportunities to optimize value creation within the sector.
Speaking on indigenous participation, Dr Irune said, “My personal opinion is that having indigenous players will definitely improve issues around fairness and this need to engage in sabotage and theft.” Collectively, independents can build a more cohesive and collaborative oil sector, he said.
Speaking at an event in May in Abuja, Chief Executive, Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe said: “Our view as a commission is that the IPPG and other prospective indigenous players should perceive the IOCs’ divestments in some of the upstream assets as an opportunity rather than a threat to the development of the Nigerian upstream petroleum sector.”
He added, “It is indeed the right time to look inwards in the sector to boost the capability of local content in value addition and optimizing the development of the nation’s hydrocarbon resources. Therefore, we encourage indigenous players across the value chain to deploy their competencies and ingenuity in promoting vibrancy and capacity utilization in the industry.”
The future appears promising not only for Oando and its stakeholders but also for Nigeria, and Africa. This transaction is immediately cash-generative and is poised to significantly contribute to the company’s cash flow and, by extension, the Nigerian economy in the medium term. Analysts are equally optimistic about the potential benefits of this development, particularly the economic advantages, and increased local content participation. Oando remains a trailblazer in the Nigerian oil and gas industry, defying expectations.
As the Oando-Eni deal concludes with Eni fully divesting from its Nigerian Subsidiary, NAOC, the IOC highlighted that NAOC Ltd participating interest in SPDC JV (Shell Production Development Company Joint Venture-operator Shell 30%, TotalEnergies 10%, NAOC 5%, NNPC 55%) is not included in the perimeter of the transaction and will be retained in Eni’s portfolio.