A Review of the Nigerian Energy Industry

Oando to double oil output to 100,000bpd in 5 years

Wale Tinubu

24 September 2014, Lagos – An indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchanges, Oando Plc, plans to increase its crude oil production capacity to 100,000 barrels per day over the next five years after completing the acquisition of ConocoPhillips’ (COP) Nigerian assets for $1.65 billion in July.

This is coming as Seven Energy International Limited, an indigenous integrated oil and gas development, production and distribution company with interests in Nigeria, and the Nigerian Sovereign Investment Authority (NSIA), better known as the Sovereign Wealth Fund (SWF), yesterday announced a $100 million investment deal.

The Chief Executive Officer of Oando Plc, Mr. Wale Tinubu, said in a statement yesterday that his company’s production capacity was currently 42,500 bpd and that the company would grow through future acquisitions as it seeks to increase market share in Nigeria.

Oando had completed the acquisition of ConocoPhillips’ Nigerian assets with the receipt of the approval of the Minister of Petroleum Resources, Mrs. Diezani Alison Madueke, last July.

With the completion of the $1.65 billion transaction, the company would be producing up to 50,000 barrels of oil equivalent per day from six producing fields.
The deal would also significantly impact the company’s near immediate upstream strategy and operations, and optimise its value across the energy chain.
In December 2012, Oando, through its Exploration and Production subsidiary Oando Energy Resources (OER), entered into an agreement with COP to acquire its Nigerian businesses.

Though Oando successfully raised the funds required to complete its acquisition of the assets, the closure of the acquisition was subject to meeting certain conditions, including government and regulatory approval, and the consent of the Minister of Petroleum Resources.

A ministerial consent is the mandatory final approval for all oil and gas acquisitions in the country as stipulated under the Petroleum Act of 1969.
With the receipt of the approval, Tinubu said the acquisition satisfied the company’s criteria for assets in production, as well as excellent appraisal and exploration prospects.

Under the investment deal between NSIA and Seven Energy, NSIA through its Gas-to-Power funds managed on behalf of the Debt Management Office (DMO), signed a commitment letter for an investment of at least $100 million in aggregate principal amount of senior secured notes due in 2023 to be issued and privately placed by Seven Energy Finance Limited.

Commenting on the agreement, the Managing Director and Chief Executive Officer of NSIA, Uche Orji, said through this investment and future projects, NSIA would be contributing to the transformation of the gas and power sectors.

“We expect that this investment will support the development of Calabar NIPP, Ibom Power, and other power stations. This is a further example of Nigeria’s successful public-private investment in infrastructure,” he said. The Director-General of DMO, Dr. Abraham Nwankwo, was upbeat, stating that through the innovative cooperation with the NSIA, his agency was able to contribute to their joint work with Seven Energy.

“This investment underscores the DMO’s role in the development of Nigeria’s power sector,” he added.

In his remark, the Chief Executive Officer of Seven Energy, Mr. Phillip Ihenacho, said he was pleased that his company gained the support of NSIA.

“This investment is a vote of confidence in Seven Energy’s vision to be a leading supplier of gas in Nigeria,” he said.

Seven Energy operations are currently centred on two focus areas of the Niger Delta and a recently acquired stake in the undeveloped asset in the Anambra Basin.

In the South-east Niger Delta, Seven Energy has interests in the Uquo Field, which lies within Oil Mining Lease (OML) 13 licence area and the Stubb Creek Field, which lies within OML 14.

The company financed the 200 million standard cubic feet per day (Scf/d) capacity Uquo Gas Processing Facility, which utilises gas from Uquo Marginal Field, operated by Frontier Oil Limited to supply Calabar NIPP power plant and Ibom power station.

In the North-east Niger Delta, Seven Energy has a Strategic Alliance Agreement with the Nigerian Petroleum Development Company (NPDC) in respect of OMLs 4, 38 and 41.

It also has an interest in the Matsogo field within OML 56, while in the Anambra Basin, Seven Energy has an interest in Oil Prospecting Lease (OPL) 905.


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