Italy’s Eni has reached an agreement to sell its Nigerian onshore subsidiary to the local company Oando. This development highlights Eni as the latest international energy giant to divest from onshore assets in the West African nation.
With the sale of its Nigerian unit, Agip Oil Company Ltd. Eni takes another significant step in its long-term strategic shift away from oil exposure in favour of natural gas, following its earlier disposal of oil activities in the Congo Republic in June.
The Italian group will keep its offshore activities in Nigeria.
The acquisition of NAOC Ltd. will nearly double Oando’s reserves to 996 million barrels of oil equivalent, the Nigerian company said.
Oando added that the purchase would enable it to “significantly increase production” and “bring to bear the important role indigenous actors will play in the future of the Nigerian upstream sector”.
Neither company commented on the price. Investment bank Jefferies pegged the deal at more than $500 million.
It is the latest move out of Nigeria’s onshore sector by an international oil major. Nearly all of them, notably Shell and Exxon Mobil Corp, have sales underway amid rampant oil theft and spills, perpetual clashes with communities, and more focused exploration budgets.
Most oil majors have kept stakes in offshore assets in Nigeria, typically Africa’s largest oil exporter, which has struggled to pump in the past several years due to theft and years of underinvestment. Some energy majors are loathe to pour cash into developing assets they want to sell.
The country, which relies on oil for the bulk of its much-needed foreign exchange, urgently needs investment in the sector, but other planned deals have hit legal and regulatory hurdles.
Exxon’s intended sale to local firm Seplat is mired in regulatory uncertainty, and it’s encountering resistance from the state-run oil company NNPC Ltd. Additionally, Shell’s asset sales are entangled in legal complexities due to ongoing court cases.
NAOC Ltd., which focuses on oil and gas exploration and production, has interests in four onshore blocks, two onshore exploration leases, and two power plants, Eni said.
The agreement is contingent upon obtaining approval from local authorities and meeting regulatory requirements. After the sale, Eni will retain the unit’s 5% stake in the Shell Production Development Company joint venture operated by Shell.
