INTERVIEW: Nigerian producers have ‘come of age’ with IOC asset purchases: Oando

Nigerian oil companies have "come of age" following divestments by the majors, and Oando is one of several aiming to meet the challenge of efficient, safe operations, while it seeks further resources around Africa, Executive Director Ainojie 'Alex' Irune said.

In a recent interview with Platts, Irune said it was "an exciting time for indigenous players," pointing to his company's purchase of assets from Italy's Eni in 2024, and other onshore deals that will leave Nigerian companies controlling a significant portion of the country's crude output.

ExxonMobil, Shell, Total, Eni and Equinor have all engaged in a sometimes fraught process of transferring onshore and shallow-water assets to Nigerian entities, with Oando's purchase the first to be completed, in August 2024.

Oando is keen to expand its footprint, demonstrated in it winning an Angolan onshore exploration license in January 2025, Irune said, arguing the resource-rich continent has space for "10, 20 or 30" similar-sized companies.

"The industry has been revitalized and the world realizes that oil and gas is not so bad -- we just need to figure out balancing renewable ambitions with oil and gas production, and doing it in a cleaner and safer way. I do see a lot more traction when it comes to developing our resources -- Africa needs the energy and the capacity to bring its people out of poverty and create prosperity on the continent."

Following the $783 million Eni deal, Oando operates a range of licenses, some heavily drilled and others less so, along with 1,600 km of gas pipelines, and infrastructure such as the Brass River oil loading terminal.

From production of 31,000 b/d of oil equivalent at the end of 2024 Oando aims to reach 100,000 boe/d in 2029, mainly through drilling and debottlenecking. This includes work in the OPL 62 area, which has had only three or four wells drilled, but also in more mature onshore licenses, Irune said. "It's a combination of new drills, opening up exploration plays and infill drilling... Geologically these are not mature, exhausted assets, they still have potential," he said.

S&P Global Commodity Insights analysts foresee Nigerian oil production (including condensate) fluctuating around 1.6 million b/d through the rest of the decade, with onshore production contributing between a quarter and a third of the total.

New responsibilities

The emergence of Oando and other Nigerian operators is a "litmus test" for a two-decade Nigerian effort to foster local content and industry capability, Irune said, arguing the process had created "a robust group of companies and people capable of transiting into these positions of responsibility."

He outlined a learning process in which Oando first entered the then Eni-operated assets in a 2014 purchase of minority stakes from US company ConocoPhillips. "Prior to last year's deal, we worked alongside Eni and operated like a shadow operator. Even though Eni was the operator, we were intentional about building our technical team," Irune said.

Solving Nigeria's oil theft problems requires a combined effort including government and security forces, and a cultural change among more "recalcitrant" parts of society, Irune said. Nigerian President Bola Tinubu is uncle to Oando's group chief executive, Wale Tinubu.

The company aims to become more proactive in heading off and detecting threats to pipelines, and in cleaning up after violations, although "it's difficult to implement any of those elements on their own," Irune said.

"You do need the element of technology, the capacity to apprehend, and the capacity to influence and engage the community on positive behaviors. You do need all of those elements to come together for security, or at least to reduce the incidence of bunkering and oil theft."

Oando could also take on a greater role offshore Nigeria, where the international majors are now focused, Irune said. Oando has been hampered by a years-long legal dispute over the planned OML 122 offshore development, outlined in its last annual report.

"The deepwater play for any upstream company helps complete the maturation fund. If you imagine that all the assets we have today are definitely going to get produced over time, you do have to back-fill that production," Irune said.

Meanwhile Oando recently attracted attention by winning operatorship of an Angolan onshore block, KON13, demonstrating the company's commitment to building a long-term "legacy" business, Irune said. The Angolan block is an exploration asset, and "these things [typically] take about from three to five years, so it's still far out," he said.

Dangote crude pricing

In the downstream, Irune called Nigeria's new, 650,000 b/d Dangote refinery a "monumental achievement." He played down tensions between the authorities and upstream producers deemed by some officials to have fallen short on obligations to supply domestic refiners by favoring exports. While regulations include an obligation to supply domestic refiners, the regulations also stipulate market prices must prevail, Irune said.

Dangote "creates the necessary product availability that we need on the continent, especially West Africa. The real challenge... is with the refinery itself having to source its feedstock at competitive prices, and that's really where it all comes to a head: do you source [crude oil] globally or do you source it locally?" Irune said.

"Local companies are playing their part, but again it's a market, so there are market terms that must apply, and since there are no subsidies we must all get market priority for our product. I think it's something that will shake itself out -- these are teething problems," he said.

Oando will also scrutinize its newly acquired infrastructure for possible sales amid a Nigerian push to foster midstream companies -- stipulated by the 2021 Petroleum Industry Act (PIA), Irune said. "There will be some deals to be done there -- business combinations or partnerships to help create the requisite value... It's not business as usual," he said. "The PIA is clear on the separation of the upstream, midstream and the downstream."