writes Baboloki Semele
In a significant stride toward advancing Nigeria’s oil and gas industry, the African Export-Import Bank (Afreximbank) has successfully arranged a monumental US$650-million financing package for Oando Petroleum and Natural Gas Company Limited. This financing will support Oando’s acquisition of a 20% stake held by Nigerian Agip Oil Company Limited (NAOC) in the NEPL/NAOC/Oando Joint Venture—a deal poised to transform the energy landscape of Africa’s largest economy.
A press release from the bank states that the joint venture, which boasts oil mining licenses 60, 61, 62, and 63, has long been a cornerstone of Nigeria’s oil production, yielding an impressive 4.4 billion barrels of oil and 12 trillion cubic feet of natural gas to date. With 1.2 billion barrels of oil and 10.7 trillion cubic feet of natural gas still in reserves, this acquisition positions Oando to significantly enhance its production capacity, scaling up from 20,000 barrels of oil equivalent per day (kboe/day) to a projected 60,000 kboe/day. This growth will not only bolster Nigeria’s oil output but also solidify the nation’s standing in the global energy market.
The release notes that Afreximbank played a pivotal role in this transaction, serving as the mandated lead arranger, bookrunner, coordinator, underwriter, and more. The bank itself underwrote US$350 million of the facility, with additional participation from Indorama Eleme Petrochemicals Limited and Mercuria Energy Group, each contributing US$150 million. This collaborative effort underscores the critical importance of indigenous participation in the development and management of Africa’s natural resources.
The official closing ceremony, held on August 22, 2024, in London, was attended by key stakeholders, including Mr. Wale Tinubu CON, Group Chief Executive of Oando, and representatives from ENI S.P.A. and Mercuria Energy Group. Afreximbank was represented by Mr. Peter Adeshola Olowononi, Head of Client Relations, Anglophone West Africa, and Mrs. Ketiwe Lwando, Manager of Structured Trade & Commodity Finance.
Reflecting on this landmark transaction, Mr. Haytham Elmaayergi, Executive Vice President, Global Trade Bank at Afreximbank, highlighted the bank’s commitment to fostering local content in Africa’s oil and gas sector. “By supporting the acquisition of key energy assets by an indigenous company like Oando, the Bank is fostering economic empowerment, enhancing regional trade, and contributing to the sustainable development of Africa’s natural resources,” he said.
This deal marks a significant milestone in Nigeria’s upstream oil and gas sector, aligning with the nation’s local content policy and its broader goals of energy security and economic sovereignty. It also signals a shift in the industry, as local companies increasingly take on ownership and operational roles traditionally dominated by international entities.
Mr. Wale Tinubu, reflecting on the journey that led to this achievement, noted, “Today’s announcement is the culmination of ten years of toil, resilience, and an unwavering belief in the realization of our ambition since the 2014 entry into the Joint Venture via the acquisition of Conoco-Philips’ 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.”
The release further says as Oando steps into its new role as operator of these valuable assets, the company’s immediate focus will be on optimizing their immense potential, advancing production, and contributing to Nigeria’s strategic energy objectives. This includes a strong commitment to responsible practices, environmental stewardship, and sustainable development that balances the needs of host communities with the nation’s ambition to boost production output.
According to the release, this transaction is more than just a financial deal as it is a testament to the power of African institutions working together to bridge the trade finance gap, empower local entities, and drive the continent’s economic growth.
Photo Credit: Afreximbank
Photo caption: The official closing ceremony, held on August 22, 2024, in London, was attended by key stakeholders, including Mr. Wale Tinubu CON, Group Chief Executive of Oando, and representatives from ENI S.P.A. and Mercuria Energy Group. Afreximbank was represented by Mr. Peter Adeshola Olowononi, Head of Client Relations, Anglophone West Africa, and Mrs. Ketiwe Lwando, Manager of Structured Trade & Commodity Finance.
