Oando PLC, an indigenous energy company in Nigeria, has been at the forefront of discussions and speculation in the country’s oil and gas sector. The company has made strategic moves in the past decade, including a complete exit from the downstream oil and gas sector to concentrate on upstream operations.
This conversation with Ainojie Irune, managing director of Oando Energy Resources Nigeria Limited, addresses persistent misconceptions about the company’s recent acquisition of the Nigerian Agip Oil Company (NAOC), divestment from OVH Energy, its departure from the downstream business, and Oando’s vision for Nigeria’s energy future. Dipo Oladehinde brings except.
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Oando PLC has recently made headlines with its acquisition of ENI’s onshore assets. However, there have been some raised concerns about the regulatory timeline for the deal, suggesting it was expedited compared to others like Shell-Renaissance and ExxonMobil-SEPLAT transactions. How do you address these concerns?
Our journey has been strategic and deliberate, starting with our acquisition of ConocoPhillips Nigeria in 2014. We made a conscious decision to transition away from naira-earning businesses to focus on dollar-denominated operations, particularly in upstream and offshore trading. This approach was essential for enhancing our production and reserves. Our recent acquisition of ENI’s onshore assets represents the culmination of a decade-long strategic effort. Knowing that there was a high probability of the exit of the traditional International Oil Companies (IOCs) in the future, we established our operations to closely mirror those of the IOCs, which required significant investment in personnel and systems.
Regarding regulatory approvals, it is crucial to recognise that the legal framework governing these processes is clear. Section 905, subsection 1 of the Petroleum Industry Act outlines the responsibilities of the license holder—in this case, ENI—to seek consent for the sale. Oando was not the entity that applied for regulatory consent; ENI initiated that process, and we were informed as required by our sales and the purchase agreement. The timeline for regulatory approvals can be subjective and dependent on various factors, including the unique challenges presented by the implementation of the Petroleum Industry Act. While we experienced delays, the process for our acquisition was comparable to that of other recent transactions, including the Chappal-Equinor deal, which was announced concurrently.
The timing of this acquisition has raised questions due to concurrent legal disputes involving ENI and Shell. How do you respond to concerns that these legal matters could influence public perception of Oando’s acquisition?
The legal disputes involving ENI, Shell and the Nigerian Government are independent of Oando’s operations and acquisitions. While public perception can sometimes be linked to these events, our focus remains on ensuring that our business operates within the legal framework and regulatory guidelines.
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Oando has a history of divestments. Recently, there has been public speculation regarding your phased divestment of shares in OVH to the Helios-Vitol consortium, particularly around ownership and Oando’s current stake. Can you clarify this situation?
Oando has undergone substantial transformations since its inception, evolving from a fuel supplier into one of Nigeria’s leading energy companies. With a long-standing history in the downstream sector, Oando achieved significant growth through key acquisitions such as Unipetrol and AGIP. The company built Nigeria’s largest downstream business, culminating in over 500 filling stations nationwide. This growth attracted investment from Helios and Vitol, resulting in a phased divestment. In 2016, we sold 60 percent of our stake, and by 2019, we had divested the remaining 5 percent. Oando no longer holds any equity in OVH, and we ended the brand licensing agreement with them in 2023.
We no longer hold any equity in OVH, and the brand licensing agreement we had with Helios and Vitol recently concluded. All related branding changes across filling stations were completed in September 2024. Our focus now is on solidifying our brand’s integrity while exploring new growth opportunities in the upstream sector.
So, just to clarify, Oando has no stake or involvement in OVH as of today?
Correct. Since 2019, Oando has had no equity in OVH, and the brand licensing agreement, which allowed the use of the Oando name, officially ended in September 2024.
Given the competitive landscape and the emergence of new players in the sector, do you believe that divesting from the downstream sector was the right decision, or could Oando consider re-entering that market in the future?
The decision to pivot away from downstream operations was driven by market dynamics and decreasing profit margins. While we continue to engage in supply and trading operations, we believe our focus on upstream and midstream activities positions us more favorably for sustainable growth. The evolving market landscape requires a nimble approach, and we remain committed to capitalising on opportunities where we can add value.
There has also been speculation regarding Oando’s involvement with a Maltese entity in the storage and refinery space. Can you clarify Oando’s position on this matter?
Oando has no interest or operations in Malta. The notion of Oando engaging with a Maltese entity was wholly based on misinformation of which we suspect malicious intent. Our due diligence found no records of such entity with which we have a business relationship. As a listed company, we adhere strictly to disclosure regulations, ensuring transparency in our operations. We operate globally and are open to opportunities that align with our strategic goals, but we have not engaged with any Maltese entities. Our global trading operations, which span multiple countries, are fully transparent and compliant with the regulations of the exchanges on which we are listed.
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As we look towards the future of Nigeria’s oil production, how do you assess the government’s current measures to enhance production levels, especially considering Oando’s recent acquisition?
Nigeria’s oil production has faced significant challenges over the past few years, primarily due to security issues and operational inefficiencies. However, with recent government initiatives and directives aimed at improving security and facilitating production, we are optimistic. Our acquisition allows us to leverage our operational expertise to enhance production capacity.
We aim to increase our output significantly, targeting 100,000 barrels per day post-acquisition, up from our current production levels of 30,000 to 40,000 barrels. We believe that with the right focus on security, community engagement, and operational excellence, we can contribute significantly to Nigeria’s production goals.
Speaking of growth and diversification, Oando Clean Energy has been quite active in the renewable energy space. Could you talk more about how the company is balancing its oil production activities with its renewable energy ambitions, particularly with initiatives like your electric bus project in Lagos?
Absolutely. Our strategy is rooted in a just energy transition. While we recognize the current importance of oil for Nigeria’s economy, we are also fully committed to developing renewable energy solutions. For example, our electric bus project, in partnership with LAMATA, has been operational for over a year. Each bus has carried over 200,000 passengers, saved over 60,000 litres of diesel and covered more than 140,000 kilometers without any significant downtime, demonstrating the project’s viability. The project has averted approx. 200,000kg of carbon emission to the environment. This is part of our broader commitment to integrating renewable energy into Africa’s development journey while still leveraging oil and gas where necessary.
It’s impressive that the electric buses have had such successful runs. Will this project be expanded?
Yes, we are actively working on scaling the initiative. The positive results from the pilot phase have validated the project, and we aim to introduce more buses and expand the infrastructure to support them, contributing to Lagos,’ and with time, Nigeria’s, transport ecosystem and reducing emissions.
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Speaking of forward-thinking, Oando’s recent acquisition announcement has resulted in a surge in share prices, placing you in the 1 trillion Naira market capitalisation club. How do you feel about this achievement, and what are Oando’s future ambitions?
Our focus has never been on accolades but rather on advancing Nigeria’s energy landscape. Oando has consistently led in various sectors, from building the largest downstream company to pioneering gas distribution and midstream jetty developments. Our goal is to drive shareholder value and contribute positively to Nigeria and the broader African market. This recent success is just the beginning; we aim to achieve 100,000 barrels of oil and 1.5 BCF of gas, and my team is committed to making this happen.
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