Oando PLC, a leading Nigerian energy company, has completed the acquisition of Nigerian Agip Oil Company (NAOC) from Italian energy giant Eni.
The $783 million deal represents a significant milestone in Oando’s growth strategy, positioning the company as a stronger player in Nigeria’s oil and gas sector.
The acquisition, finalised after receiving approval from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), is a pivotal move for Oando.
It not only doubles the company’s stake in key oil blocks but also significantly boosts its reserves and infrastructure assets.
The deal, which includes both reimbursement and consideration for the assets, is expected to immediately enhance Oando’s financial performance.
The acquisition of NAOC has provided Oando with an increased stake in four crucial Oil Mining Leases (OMLs)—OMLs 60, 61, 62, and 63.
Oando’s participating interest in these blocks has risen from 20% to 40%, giving the company greater control over oil and gas production in these areas.
This acquisition also includes 40 discovered oil and gas fields, 24 of which are currently producing.
In addition to expanding its control over oil fields, Oando has gained significant infrastructure through this deal.
The acquisition includes approximately 1,490 kilometers of pipelines, three gas processing plants, and the Brass River Oil Terminal. Oando also now holds a stake in the Kwale-Okpai power plants, which have a combined capacity of 960 megawatts. .
One of the most notable outcomes of this acquisition is the dramatic increase in Oando’s oil and gas reserves.
The company’s total reserves have almost doubled, jumping from 505.6 million barrels of oil equivalent (MMboe) to over 1 billion barrels.
This 98% increase, based on 2022 reserve estimates, significantly enhances Oando’s ability to meet the growing energy demands in Nigeria and beyond.
Wale Tinubu, the Group Chief Executive of Oando PLC, described the acquisition as a historic moment for the company and for Nigeria’s indigenous energy sector.
“This is a win for Oando and every indigenous energy player as we take our destiny in our hands and play a pivotal role in the next phase of Nigeria’s upstream evolution,” Tinubu stated.
He highlighted that this acquisition is the culmination of efforts that began nearly a decade ago with Oando’s purchase of ConocoPhillips’ Nigerian assets in 2014.
The latest deal with Eni is seen as a strategic move to strengthen Oando’s upstream capabilities, allowing the company to better compete in the global energy market while contributing to Nigeria’s goal of boosting oil production.
Tinubu emphasised Oando’s commitment to optimising the newly acquired assets, with a focus on responsible practices and sustainable development.
He reiterated that the company is dedicated to contributing to Nigeria’s broader economic goals, particularly in the energy sector.
The acquisition is expected to have an immediate positive impact on Oando’s cash flow, providing the company with additional financial resources to pursue further growth.
However, Oando has cautioned that while the acquisition is expected to yield significant benefits, it also comes with inherent risks and uncertainties.
These include potential fluctuations in crude oil prices, changes in project parameters, and challenges related to international operations. The company advised investors to consider these risks when evaluating Oando’s future prospects.
Despite these challenges, Oando remains optimistic about the acquisition’s potential to drive growth and value creation. The acquisition of NAOC is part of a broader trend in Nigeria’s energy sector, where indigenous companies are increasingly taking over assets from international oil majors. This shift is driven by both economic and regulatory factors, including the Nigerian government’s efforts to increase local participation in the oil and gas industry.
Oando’s acquisition of NAOC comes at a time when the global energy landscape is undergoing significant changes. The push for renewable energy and the transition away from fossil fuels are creating new challenges for oil and gas companies. In this context, Oando’s strategy of expanding its upstream operations and investing in infrastructure is seen as a way to secure its position in an uncertain market.
Eni’s decision to sell NAOC to Oando reflects the broader trend of international oil companies (IOCs) divesting from onshore assets in Nigeria. These companies are increasingly focusing on offshore projects, which are seen as less vulnerable to security challenges and other risks associated with onshore operations. By acquiring NAOC, Oando has taken on the responsibility of managing these assets, which are critical to Nigeria’s energy supply.
