Eni Agrees to Sell Nigerian Oil and Gas Subsidiary to Oando in Latest Onshore Asset Divestment
GDANSK, LONDON, Sept 4 (Reuters) – Italian energy company Eni has reached an agreement to sell its Nigerian onshore oil and gas subsidiary, the Nigerian Agip Oil Company Ltd (NAOC), to local oil company Oando. The sale, which is subject to regulatory approval, is part of Eni’s ongoing strategy to divest onshore assets.
According to Oando, the acquisition of NAOC will nearly double its reserves to 996 million barrels of oil equivalent, allowing the Nigerian company to significantly increase its production. Oando believes this purchase highlights the important role indigenous actors will play in the future of Nigeria’s upstream sector.
Eni’s decision to sell its onshore assets in Nigeria follows a trend among international oil majors, such as Shell and Exxon Mobil Corp, who are also divesting from the onshore sector. This is primarily due to challenges including rampant oil theft and spills, clashes with communities, and more focused exploration budgets. Investment bank Jefferies values the deal at over $500 million, although neither Eni nor Oando have disclosed the exact price.
Jefferies commented that Eni’s move to reduce its exposure to the region showcases the difficulties it faces, particularly with bunkering and other disruptions. Most oil majors, including Eni, have held onto stakes in offshore assets in Nigeria, which has struggled to maintain production in recent years due to theft and under-investment. Some companies are hesitant to invest in developing assets they plan to sell.
Nigeria heavily relies on oil for foreign exchange, making investment in the sector crucial. However, other sales have encountered legal and regulatory obstacles. Exxon’s planned sale to local firm Seplat is currently in regulatory limbo and opposed by state oil company NNPC Ltd. Shell’s asset sales have also faced complications due to court cases.
NAOC is primarily involved in oil and gas exploration and production. It holds interests in four onshore blocks, two onshore exploration leases, and two power plants, according to Eni. The completion of the deal is contingent on local and regulatory authorization, which has been delayed in previous asset sales involving Exxon and Shell due to legal and political issues.
Following the sale, Eni will retain a 5% stake in the Shell Production Development Company (SPDC) joint venture operated by Shell.
Additional reporting by MacDonald Dzirutwe; Editing by Gianluca Semeraro, Louise Heavens, and Mike Harrison
Our Standards: The Thomson Reuters Trust Principles.