Eni completes sale of its Nigerian onshore subsidiary

Eni has completed the sale of its onshore oil and gas exploration and production subsidiary in Nigeria to local player Oando PLC for nearly $800 million.

The sale of Nigerian Agip Oil Co. Ltd. (NAOC), which specializes in the Niger Delta, announced on September 4, 2023, comes amid a rural exodus from the oil-theft-plagued region in the south of the West African country.

“Eni will continue to maintain its presence in Nigeria through investments in deep-sea projects and liquefied natural gas, while exploring new opportunities in the agricultural commodity sector,” Italy’s state-controlled energy giant said in a recent statement on its website announcing the closure.

NAOC operates oil production licenses (OMLs) 60, 61, 62 and 63 in the Niger Delta through NAOC’s joint venture with Oando and state-owned oil and gas company Nigeria National Petroleum Co. Ltd. (NNPC). NAOC and Oando each hold a 20 percent share in the joint venture, while the remaining 60 percent is held by NNPC E&P Ltd. Oando has now increased its share in the four licenses to 40 percent.

The transaction 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 contributed 40,000 barrels of oil equivalent per day to Eni’s production, according to an Eni update on the transaction dated 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 potentials and indications, twelve production stations, approximately 1,490 km (925.8 miles) of pipelines, three gas processing plants, the Brass River Oil Terminal, the Kwale-Okpai Phase 1 and 2 power plants (with a total nominal 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 was valued at $783 million, according to Oando. It is largely financed through debt; the African Export-Import Bank (Afreximbank) announced on Friday a $500 million senior credit facility and a $150 million subordinated credit facility. The bank is participating with two other lenders, but mainly Afreximbank, to help Oando with the purchase.

“It is a win-win for Oando and all domestic energy players as we take control of our destiny and play a central role in this next phase of the country’s upstream development,” said Oando Managing Director Wale Tinubu after the acquisition was completed.

The transaction did not include NAOC’s five percent stake in the Niger Delta-focused joint venture Shell Petroleum Development Co. (SPDC JV).

The British Shell Group operates the joint venture with a 30 percent share. However, Shell has reached an agreement to transfer its share to Renaissance Africa Energy Co. Ltd. for up to $2.4 billion plus any contingent payments. NNPC is the majority owner with 55 percent. The remaining 10 percent is held by the French company TotalEnergies SE, which is also selling its share to the Nigerian company Chappal Energies Mauritius Ltd. for $860 million.

The SPDC joint venture, which has been the victim of oil spills and thefts, owns 15 onshore concessions that mainly produce oil. Three other SPDC concessions in shallow waters – OML 23, 28 and 77 – produce mainly gas and account for 40 percent of the West African country’s liquefied natural gas (LNG) supply, TotalEnergies said on July 17.

In Nigeria, where Eni entered in 1962, the company produced an average of 11 million barrels of oil and condensate and 63 billion cubic feet of natural gas per year before the divestment, according to the company’s website.

Eni also owns a 10.4 percent stake in Nigeria LNG Ltd. (NLNG), which produces 22 million tonnes of LNG and five million tonnes of liquefied natural gas per year, according to figures on NLNG’s website.

Offshore reorientation

Eni stated that the divestment to Oando will allow the company to focus on its offshore assets in Nigeria. However, as with Eni’s share in the SPDC joint venture, the company has decided to retain onshore assets in which it holds non-operating interests.

Shell and TotalEnergies also said their exit from the SPDC joint venture would allow them to focus on offshore assets in Nigeria.

Zoë Yujnovich, Shell’s director of integrated gas and upstream, said in the company’s January 16 announcement of the divestment to Renaissance: “This agreement represents an important milestone for Shell in Nigeria. It is consistent with our previously announced intention to exit onshore oil production in the Niger Delta, simplify our portfolio and focus future disciplined investments in Nigeria on our deepwater and integrated gas positions.”

Nicolas Terraz, President of Exploration and Production at TotalEnergies, said in a press release on July 17 regarding the sale to Chappal Energies: “TotalEnergies continues to actively manage its portfolio in Nigeria, remaining true to its strategy of focusing on its offshore oil and gas assets.”

Exxon Mobil Corp. has also reached an agreement to sell its stake in Mobil Producing Nigeria Unlimited to local player Seplat Energy PLC, the U.S. company announced on February 25, 2022. Mobil Producing Nigeria holds a 40 percent stake in four OMLs, including over 90 shallow water and onshore platforms and 300 production wells, ExxonMobil said at the time.

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