African Export-Import Bank (Afreximbank), on Friday recalled how it successfully arranged a senior US$500m and a junior US$150m reserve-based lending facility to enable Oando Petroleum and Natural Gas Company Limited finance acquisition of a 20% participating interest held by Nigerian Agip Oil Company Limited (NAOC) in the NEPL/NAOC/Oando Joint Venture in Nigeria.

The participation by Afreximbank represented 83% of the total US$783m spent by Oando Plc to successful complete the acquisition of the entire shareholding interest NAOC from the Italian energy company, Eni, comprising consideration for the asset and reimbursement.

Afreximbank who was retained as mandated lead arranger for the transaction, a significant milestone in Oando’s long-term strategy to expand its upstream, besides serving as bookrunner, coordinator, underwriter, escrow agent, facility agent and security trustee, and also participated and underwrote US$350m of the facility.

Other participants in the transaction were Indorama Eleme Petrochemicals Limited, with US$150m, and Mercuria Energy Group, with US$150m.

The joint venture, with significant oil and gas assets, including oil mining licenses 60, 61, 62 and 63, has produced 4.4bn barrels of oil and 12tr cubic feet of natural gas to date, with 1.2bn barrels of oil and 10.7 trillion cubic feet of natural gas remaining.

Oando expects the acquisition to significantly enhance its production capacity from the current 20,000 barrels of oil equivalent per day (kboe/day) to 60,000 kboe/day, effectively boosting Nigeria’s oil output and reinforcing the country’s position in the global energy market. It also expects the transaction to drive local economic growth by creating jobs, improving infrastructure and fostering technological advancements in the oil and gas sector.

Wale Tinubu, Group Chief Executive of Oando Plc, led the company’s participation at the closing ceremony held in London, United Kingdom on August 22, 2024, ccompanied by representatives of ENI S.P.A. led by Guido Brusco, Group Chief Operating Officer. Others were representatives from Mercuria Energy Group, while Afreximbank was represented by Peter Adeshola Olowononi, Head, Client Relations, Anglophone West Africa and Mrs Ketiwe Lwando, Manager Structured Trade & Commodity Finance.

Commenting on the transaction, Mr. Haytham Elmaayergi, Executive Vice President, Global Trade Bank, Afreximbank, said the facility marked a critical step in advancing the bank’s strategy for promoting local content in Africa’s oil and gas sector.

According to him, “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 described the transaction as a significant milestone in Nigeria’s upstream oil and gas sector, saying that it underscored the increasing role of local companies in the ownership and operation of critical energy assets, in line with Nigeria’s local content policy, energy security and economic sovereignty strategy.

Also speaking, Tinubu described the announcement as “the culmination of ten years of toil, resilience, and an unwavering belief in the realisation 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. With our assumption of the role of operator, our immediate focus is on optimizing the assets’ immense potential, advancing production and contributing to our strategic objectives. This we will do while prioritizing responsible practices and sustainable development in ensuring a balanced approach to our host communities, and environmental stewardship as we complement the nation’s plan to boost production output,” added.

Tinubu expressed appreciation to “Afreximbank for its unwavering leadership in bridging the trade finance gap in Africa and ensuring that Oando can consolidate its stake in the Joint Venture via the acquisition of NAOC 20% stake.”

The deal, Oando said in an August 22 statement to the Nigerian Exchange (NGX) by Ms. Ayotola Jagun, Chief Compliance Officer and Company Secretary, raises its ownership stake in all NEPL/NAOC/OOL Joint Venture assets and infrastructure, including 40 discovered oil and gas fields, of which 24 are currently producing, approximately forty identified prospects and leads, twelve production stations, approximately 1,490 km of pipelines, three gas processing plants, the Brass River Oil Terminal, the KwaleOkpai phases 1 & 2 power plants (with a total nameplate capacity of 960 megawatts), and associated infrastructure.

Also, based on the 2022 reserves estimates, Oando’s total reserves stand at 505.6MMboe and the transaction will deliver a 98% increase of 493.6MMboe, bringing the total reserves to 1.0Bnboe.