Eni has finalized the divestment of its onshore oil and gas exploration and production subsidiary in Nigeria to local player Oando PLC for nearly $800 million.
The sale of Niger Delta-focused Nigerian Agip Oil Co. Ltd. (NAOC), announced September 4, 2023, comes amid an onshore exodus from the oil theft-plagued region in the south of the West African country.
“Eni will continue to be present in the country through investment in deepwater projects and Nigeria LNG, while also exploring new opportunities related to agri-feedstock sector”, the Italian government-controlled energy major said in a recent statement on its website announcing the closure.
NAOC operates Oil Mining Licenses (OMLs) 60, 61, 62 and 63 in the Niger Delta through the NAOC joint venture with Oando and national oil and gas company Nigeria National Petroleum Co. Ltd. (NNPC). NAOC and Oando hold a 20 percent stake each in the joint venture while the remaining 60 percent is under NNPC E&P Ltd. Oando has now raised its stake in the four licenses to 40 percent.
The transaction has also increased Oando’s reserve estimates by 98 percent from 493.6 million barrels of oil equivalent in 2022 to one billion barrels of oil equivalent, Oando said separately. NAOC had a contribution of 40,000 barrels of oil equivalent per day to Eni’s production, according to an Eni update of the transaction July 24, 2024.
The NAOC joint venture portion of Oando’s acquisition included “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 [925.8 miles] 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 960 megawatts), and associated infrastructure”, Oando said.
The sale also included NAOC’s 48 percent and 90 percent operating interests in exploration leases 135 and 282 respectively.
The transaction amounted to $783 million, Oando said. That is mostly funded by debt; the African Export-Import Bank (Afreximbank) announced Friday a senior $500-million and junior $150-million credit facility, in partnership with two other lenders but mostly involving Afreximbank, to help Oando with the purchase.
“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”, Oando chief executive Wale Tinubu said after the completion of the acquisition.
The transaction did not include NAOC’s five percent stake in the Niger Delta-focused Shell Petroleum Development Co. Joint Venture (SPDC JV).
Britain’s Shell PLC holds operatorship of the joint venture with a 30 percent stake. However it has entered an agreement to transfer its stake to Renaissance Africa Energy Co. Ltd. for up to $2.4 billion plus potential contingent payments. NNPC is the majority owner with 55 percent. France’s TotalEnergies SE has the remaining 10 percent, though it is also selling its interest to Nigerian-owned Chappal Energies Mauritius Ltd. for $860 million.
The SPDC JV, which has suffered oil spills and theft, holds 15 onshore leases that produce mainly oil. Three other SPDC JV licenses in shallow waters — OML 23, 28 and 77 — produce mainly gas, accounting for 40 percent of the West African country’s liquefied natural gas (LNG) supply, according to TotalEnergies’ announcement of the sale to Chappal Energies July 17.
In Nigeria, where Eni entered 1962, the company had an average annual production of 11 million barrels of oil and condensate and 63 billion cubic feet of natural gas before the divestment, according to information on Eni’s website.
Eni also holds a 10.4 percent stake in Nigeria LNG Ltd. (NLNG), which, according to figures on NLNG’s website, produces 22 million metric tons per annum (MMtpa) of LNG and five MMtpa of natural gas liquids.
Offshore Refocus
Eni said the divestment to Oando allows it to focus on its operated offshore assets in Nigeria. However, as with Eni’s stake in the SPDC JV, the company has decided to retain onshore assets in which it holds non-operating stakes.
Shell and TotalEnergies had also said their exit from the SPDC JV would allow them to focus on offshore assets in Nigeria.
Shell integrated gas and upstream director Zoë Yujnovich said January 16 in the company’s announcement of the divestment to Renaissance, “This agreement marks an important milestone for Shell in Nigeria, aligning with our previously announced intent to exit onshore oil production in the Niger Delta, simplifying our portfolio and focusing future disciplined investment in Nigeria on our Deepwater and Integrated Gas positions”.
Nicolas Terraz, president for exploration and production at TotalEnergies, said July 17 in a press release about the sale to Chappal Energies, “TotalEnergies continues to actively manage its portfolio in Nigeria, in line with its strategy to focus on its oil offshore and gas assets”.
Exxon Mobil Corp. has also entered an agreement to sell its equity stake in Mobil Producing Nigeria Unlimited to local player Seplat Energy PLC, as announced by the United States company February 25, 2022. Mobil Producing Nigeria holds a 40 percent stake in four OMLs including over 90 shallow-water and onshore platforms and 300 producing wells, ExxonMobil said then.
Source:https://www.rigzone.com