Nigeria’s top domestic energy solutions supplier, Oando PLC, has officially acquired Nigerian Agip Oil Company (NAOC), an Eni affiliate. The agreement, which was signed at an event in London, signifies a big change in Nigeria’s energy industry and emphasizes the rising power of local firms. This deal comes ten years after Oando significantly expanded its production capacity by acquiring ConocoPhillips’ Nigerian assets for $1.8 billion. Wale Tinubu, the Group Chief Executive of Oando PLC, emphasized that the acquisition of NAOC is the result of ten years of tenacity, perseverance, and an unwavering optimism.
Through this purchase, Oando’s stake in Oil Mining Leases (OMLs) 60, 61, 62, and 63 increased from 20 percent to 40 percent. The firm now has more influence over 40 discovered oil and gas fields – 24 of which are presently producing. Additionally, it greatly increases the company’s reserves from 505.6 million barrels of oil equivalent (MMboe) to 1 billion boe, boosting its production capability. The Kwale-Okpai power facilities, which have a combined capacity of 960 MW, the Brass River Oil Terminal, three gas processing plants, twelve production stations, and over 1,490 km of pipelines would all be under the ownership and operational control of Oando.
Enabling decision-making freedom for the company.
This Infrastructure is essential for maximizing distribution and production, which raises the operational effectiveness of the company. Oando’s cash flow would significantly increase by the transaction, which is cash-generative right away. This would improve the company’s financial standing and, in the medium run, have a favorable impact on the Nigerian economy. Through this acquisition, Oando hopes to take advantage of more prospective advantages in the mining, infrastructure, Agri-feedstock, and clean energy sectors. Its stakeholders would also benefit from the company’s foundation growth and value creation.
Now that Oando is managing these assets, it has more decision-making freedom, which enables it to maximize the potential of the assets and coordinate activities with its strategic goals. Encouraging efficiency and optimizing the value derived from these assets depend on this oversight. This recent acquisition, among others, reflects the ongoing trend in which International Oil Companies (IOCs) are shifting their concentration away from Nigeria’s shallow water and onshore assets to more less riskier offshore projects in places like Namibia and Guyana and toward Nigeria.
Indigenous firms are increasingly acquiring IOCs holdings.
Moreover, this trend gives native businesses like Oando the chance to become more significant players in Nigeria’s oil and gas sector. Such deals are anticipated to improve their cash flow and boost Nigeria’s Economy while putting local businesses in a better position to take on greater accountability in the industry’s future, particularly in the areas of clean energy and infrastructure development. All things considered, the deal highlights how indigenous businesses can revitalize Nigeria’s energy industry in spite of obstacles like underinvestment and oil theft.
Comparable transformations in Nigeria’s oil and gas sector relating to the growing practice of local businesses acquiring assets formerly held by foreign oil companies varies and have been occurring for a few years now. An indigenous firms, Chappal Energies, disclosed in November 2023 that it had signed a deal to acquire the Nigerian business of the Norwegian oil giant Equinor. Another well-known independent oil business in Nigeria, Seplat Energy, announced in February 2022 that it had acquired all of the shares of ExxonMobil’s affiliate, Mobil Producing Nigeria Unlimited (MPNU).
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Also, Shell has reached an agreement to sell the Shell Petroleum Development Company of Nigeria Limited (SPDC), its onshore subsidiary in Nigeria, to the Renaissance Consortium for a sum of $2.4 billion. Another major IOC, TotalEnergies, has also been gradually divesting its onshore and shallow water holdings in Nigeria. This has given local actors in the industry more clout by enabling indigenous businesses to intervene and purchase these assets. It is believed that the participation of indigenous businesses is essential to promoting more equitable procedures, decreasing sabotage, and maximizing the value of the country’s hydrocarbon resources.