Oando secures major foothold in Nigerian oil sector with $783m NAOC acquisition from Eni

Eni, the Italian multinational oil and gas giant, has officially concluded the sale of its Nigerian subsidiary, Nigerian Agip Oil Company (NAOC), to Oando PLC, a prominent energy solutions provider headquartered in Nigeria. The transaction, valued at $783 million, represents a significant development in the West African oil sector and marks a strategic realignment for both companies.

The sale, which was initially disclosed in September 2023, received the green light from all pertinent regulatory bodies, including the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). The commission’s approval, granted last month, paved the way for the finalization of the deal.

NAOC’s Strategic Assets in Nigeria

NAOC, a wholly owned subsidiary of Eni, has played a crucial role in Nigeria’s oil and gas landscape. The company’s operations are primarily centered on onshore exploration and production, as well as power generation, which have made it a key player in the region. NAOC operated four onshore oil blocks—OML 60, 61, 62, and 63—through a joint venture structure. In this arrangement, NAOC held a 20% stake, while Oando also held 20%, and the Nigerian National Petroleum Corporation Exploration & Production (NNPC E&P) controlled the remaining 60%.

Oando finalizes $783m acquisition of Eni’s Nigerian subsidiary NAOC, doubling its stake in key oil blocks, boosting reserves by 493.6MMboe, and marking a new chapter in Nigeria’s oil industry.

The company also has a significant presence in Nigeria’s power generation sector through its operation of the Okpai 1 and Okpai 2 power plants, which collectively boast a nameplate capacity of 960 megawatts. Additionally, NAOC holds a dominant interest in two onshore exploration leases, OPL 282 and OPL 135, with stakes of 90% and 48%, respectively.

However, it’s noteworthy that the transaction does not include NAOC’s interest in the Shell Production Development Company joint venture (SPDC JV). In this venture, NAOC retains a 5% stake alongside Shell, which holds a 30% interest, TotalEnergies with 10%, and NNPC with a majority 55% stake. This specific asset remains under Eni’s control, reflecting the company’s continued interest in strategic assets within the country.

Eni’s Strategic Divestment and Oando’s Ambitious Expansion

The completion of the NAOC sale is in line with Eni’s broader strategy to streamline its global upstream portfolio. The company has been actively divesting non-core assets as part of its efforts to rebalance its portfolio and focus on more strategic, high-value opportunities. Eni remains committed to maintaining a strong presence in Nigeria, particularly through its investments in deepwater projects and its involvement in Nigeria LNG, which is crucial for the country’s export revenues.

For Oando, the acquisition is a monumental step forward in its long-term strategy to strengthen its upstream operations and reinforce its standing as a major player in Nigeria’s oil and gas industry. The deal effectively doubles Oando’s stake in the OML 60, 61, 62, and 63 blocks to 40%, significantly enhancing its production capacity and reserves. This expansion positions Oando as a more formidable force in the industry, enabling the company to better compete with both domestic and international oil firms operating in Nigeria.

The transaction also increases Oando’s ownership in the NEPL/NAOC/OOL joint venture assets. These assets encompass 40 discovered oil and gas fields, nearly 40 identified prospects, and 12 production stations, highlighting the strategic importance of the acquisition. Additionally, the deal covers approximately 1,490 kilometers of pipelines, three gas processing plants, the Brass River Oil Terminal, and the Kwale-Okpai phases 1 and 2 power plants. These extensive assets further solidify Oando’s position in the energy sector, providing the company with the necessary infrastructure to scale its operations.

Boosting Reserves and Future Growth Prospects

According to Oando’s 2022 reserves estimates, the company’s total reserves were reported at 505.6 million barrels of oil equivalent (MMboe). With the completion of this acquisition, Oando is expected to see a significant increase in its reserves by approximately 493.6 MMboe. This boost in reserves not only enhances Oando’s production potential but also improves its long-term growth prospects as it seeks to optimize its newly acquired assets.

Wale Tinubu, the Group Chief Executive of Oando, expressed his enthusiasm for the deal, stating, “Today’s announcement is the culmination of ten years of toil, resilience, and an unwavering belief in the realisation of our ambition since the 2014 entry into the Joint Venture via the acquisition of ConocoPhillips Nigerian Portfolio. It is a win for Oando, and every indigenous energy player, as we take our destiny in our hands, and 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 optimising the assets’ immense potential, advancing production, and contributing to our strategic objectives.”

The Broader Impact on Nigeria’s Oil and Gas Sector

This transaction is likely to have far-reaching implications for Nigeria’s oil and gas sector. Oando’s expanded footprint and increased control over key assets could lead to more aggressive exploration and production activities in the region, potentially boosting Nigeria’s oil output. Moreover, as Oando takes on the role of operator for the newly acquired assets, the company may introduce new technologies and best practices that could enhance operational efficiency and environmental sustainability.

Furthermore, the deal underscores the increasing role of indigenous companies in Nigeria’s oil and gas industry. With the government’s push for greater local content and the participation of Nigerian companies in the energy sector, Oando’s acquisition of NAOC marks a significant milestone. It reflects the broader trend of Nigerian companies taking on more significant roles in the nation’s critical industries, reducing dependence on foreign multinationals.

The completion of Eni’s $783 million sale of Nigerian Agip Oil Company to Oando marks a strategic shift in Nigeria’s oil and gas industry. While Eni focuses on streamlining its portfolio and concentrating on deepwater projects, Oando is poised to capitalize on the increased stake and reserves, reinforcing its position as a leading energy company in Nigeria. This transaction not only reshapes the landscape of the Nigerian oil industry but also highlights the growing influence of indigenous players in the sector, paving the way for a new era of growth and development.