Oando PLC has announced the successful acquisition of Eni’s Nigerian subsidiary, Nigerian Agip Oil Company (NAOC). This milestone, achieved at a signing ceremony in London, marks a new era for the Nigerian energy sector after the transaction was first announced in September 2023.

The acquisition comes a decade after Oando’s $1.8 billion acquisition of ConocoPhillips’ Nigeria interest, a transaction that 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.

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, and the Kwale-Okpai phases 1 & 2 power plants (with a total nameplate capacity of 960MW), and associated infrastructure.

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 into our own 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 optimising the assets’ immense potential in contributing to our strategic objectives, while 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, the agri-feedstock sector, as well as infrastructure and mining.”

Furthermore, the deal will significantly boost the company’s production reserves, which currently stand at 505.6MMboe, to 1.0Bnboe.

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-positioned 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, further asset divestments are anticipated 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). Meanwhile, 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. Shell also 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 optimise 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 the 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 of the 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 inward in the sector to boost the capability of local content in value addition and optimising 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 utilisation in the industry.”