Afreximbank spearheads $650m loan for Oando’s acquisition of NAOC stake in Nigerian JV

Business a.m.

The African Export-Import Bank (Afreximbank) has arranged a senior $500-million and a junior $150-million reserve-based lending facility for Oando Petroleum and Natural Gas Company Limited.

The facility secured for Oando was leveraged to finance the acquisition of the 20 percent participating interest in the NEPL/NAOC/Oando joint venture, held by Nigerian Agip Oil Company Limited (NAOC).

The joint venture, which Oando’s recent acquisition was focused on, encompasses significant oil and gas assets, including oil mining licenses 60, 61, 62 and 63. These assets have already yielded a remarkable production of 4.4 billion barrels of oil and 12 trillion cubic feet of natural gas, with a substantial remaining potential of 1.2 billion barrels of oil and 10.7 trillion cubic feet of natural gas.

Afreximbank, mandated as the lead arranger for the transaction, wore multiple hats as bookrunner, coordinator, underwriter, escrow agent, facility agent, and security trustee. In addition, the bank also participated and underwrote $350 million of the total facility.

Joining Afreximbank in this landmark deal were Indorama Eleme Petrochemicals Limited, with a $150 million contribution, and Mercuria Energy Group, with another $150 million.

Oando’s acquisition of the 20 percent stake in the NEPL/NAOC/Oando Joint Venture is expected to boost the company’s daily oil equivalent production from the current 20,000 barrels to 60,000 barrels. This increase in output is poised to not only reinforce Nigeria’s standing in the international energy market but also provide a much-needed economic stimulus to the country, driving job creation, infrastructural improvements, and technological advancements in the oil and gas sector.

The closing ceremony of the transaction, held in London on August 22, 2024, saw the attendance of a number of key figures, including Wale Tinubu, group chief executive of Oando, who was joined by Guido Brusco, group chief operating officer of ENI S.P.A. and representatives from Mercuria Energy Group.

Afreximbank’s presence at the ceremony was marked by the participation of Peter Adeshola Olowononi, head of client relations for Anglophone West Africa, and Ketiwe Lwando, manager of structured trade and commodity finance.

Commenting on the transaction, Haytham Elmaayergi, executive vice president of global trade bank at Afreximbank, emphasised the significance of the reserve-based lending facility, calling it a crucial step in advancing the bank’s strategy for fostering local content in Africa’s oil and gas sector.

“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 said.

Elmaayergi 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.

Wale Tinubu, group chief executive OANDO, stated: “Today’s announcement is 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.”

The OANDO chief also thanked 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 percent stake. NAOC is a subsidiary of Italian multinational ENI S.P.A.