Eni closes $783 million oil divestment deal with Nigeria's Oando

Eni has finally completed its Nigeria divestment deal with local oil firm Oando after months of regulatory hurdles, the companies announced Aug. 22, marking a turning point for the African country's crude sector.

In a statement, the Italian energy major said it had closed the sale of its wholly owned subsidiary Nigerian Agip Oil Company, which holds a string of onshore exploration and production assets, to Oando.

The Nigerian firm said that the deal was worth $783 million.

"The transaction, which received the approval of all relevant authorities, is in line with Eni's strategy focused on the rationalization of the upstream activities by rebalancing its portfolio and divesting non-strategic assets," Eni said.

It comes a month after the Italian firm received a green light from Nigeria's upstream regulator to complete the sale.

The deal makes Oando – run by the nephew of Nigerian president Bola Tinubu – one of Nigeria's largest oil and gas producers. It includes 20% participating interests in four onshore oil blocks – OMLs 60, 61, 62 and 63 – as well as stakes in the Brass terminal, exploration concessions and power plants.

Oando now holds a 40% operating stake in the blocks while state-owned Nigerian National Petroleum Company has the other 60%. Ahead of the sale, COO Alex Irune told Commodity Insights the deal would double the firm's crude output to 50,000 boe/d.

In its statement, Eni reaffirmed that the transaction does not cover its 5% participating interest in the Shell Production Development Company joint venture, which produces oil and gas. The Italian firm will also hold onto deepwater oil projects and a stake in Nigeria LNG.

"Today's announcement is the culmination of ten years of toil, resilience, and an unwavering belief in the realization of our ambition since the 2014 entry into the Joint Venture via the acquisition of Conoco-Philips Nigerian Portfolio," said Wale Tinubu, Oando's CEO, in the company's statement. "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."

Eni first announced the deal with Oando in September 2023, but it stalled after state-owned Nigerian National Petroleum Company, which holds the remaining 60% stake in the projects, suggested it could exercise its pre-emption rights.

The agreement marks a turning point for Nigeria's oil sector, with fellow majors ExxonMobil, TotalEnergies, Shell and Equinor also agreeing to sell onshore and shallow water assets to local firms. Those deals have also faced slow approvals.

The divestments follow years of spills, oil theft and sabotage in the troubled Niger Delta, which have hit Nigerian production. The country pumped 1.46 million b/d of crude in July, according to the Platts OPEC Survey from Commodity Insights, well below its estimated 2.2 million b/d capacity.

While Nigerian companies lack the deep pockets of IOCs, they say their commitment to the sector and local expertise can help boost domestic production and improve ties with local communities.

"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," said Oando's Tinubu. "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."

Clementine Wallop, senior advisor at Horizon Engage, said it was "very encouraging to see one of these divestment deals cross the line," but said the link between the presidency and the company will "doubtless draw some comment."

"That aside, Oando will now want to show that it can push ahead with aggressive output gains that will help realize Nigeria's highly ambitious near-term targets for its oil production," Wallop added.