Afreximbank: We provided $650m loan for Oando’s acquisition of NAOC

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

Reserve-based lending is a type of financing for independent exploration and production companies, in which the value of oil and gas reserves determine the quantity of a lending facility accessible to the borrower.

According to a statement on Friday, the facility was used to finance Oando’s acquisition of the 20 percent participating interest held by Nigerian Agip Oil Company Limited (NAOC) in the NNPC Exploration & Production Limited (NEPL)/NAOC/Oando joint venture (JV).

On Thursday, Oando said it had completed the acquisition of a 100 percent shareholding interest in the NAOC from Eni, an Italian oil major.

“The Transaction increases Oando’s current participating interests in OMLs 60, 61, 62, and 63 from 20% to 40%,” Oando said.

Commenting on the deal, Afreximbank said the joint venture, with significant oil and gas assets, “including oil mining licenses 60, 61, 62 and 63,” has produced 4.4 billion barrels of oil and 12 trillion cubic feet of natural gas to date. 

Afreximbank said the JV still has reserves of 1.2 billion barrels of oil and 10.7 trillion cubic feet of natural gas. 

“Afreximbank, retained as mandated lead arranger for the transaction, also served as bookrunner, coordinator, underwriter, escrow agent, facility agent and security trustee, and also participated and underwrote US$350 million of the facility,” the statement reads.

‘INDORAMA, MERCURIA ENERGY ALSO PARTICIPATED IN ACQUISITION DEAL’

Afreximbank said Indorama Eleme Petrochemicals Limited, with $150 million, and Mercuria Energy Group, with $150 million, also participated in the deal. 

“Oando expects the acquisition to significantly enhance its production capacity from the current 20,000 barrels of oil equivalent per day (kboe/day) to 60,000 kboe/day, effectively boosting Nigeria’s oil output and reinforcing the country’s position in the global energy market,” the bank said.

Afreximbank said Oando also expects the transaction to foster local economic growth by creating jobs, improving infrastructure, and fostering technological advancements in the oil and gas sector.

Commenting on the transaction, Haytham Elmaayergi, executive vice-president, global trade bank, Afreximbank, said the facility marked a significant step in advancing the bank’s strategy for promoting 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.

He described the transaction as a significant milestone in Nigeria’s upstream oil and gas sector. 

Elmaayergi added that it represented 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.

On his part, Wale Tinubu, group chief executive officer of Oando, said the company would prioritise 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”.

Tinubu 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’s 20 percent stake.