Africa: Eni Gets Last Nigerian Approval for Sale of Onshore E&P Subsidiary

The Nigerian Upstream Petroleum Regulatory Commission cleared Eni SPA’s divestment of an onshore-focused oil and gas exploration and production (E&P) subsidiary to a local player, the Italian global energy major said Wednesday.

“Having already obtained all other relevant local and regulatory authorities’ authorizations, this achievement will allow Eni to proceed to the completion of the transaction for the sale of Nigerian Agip Oil Company Ltd (NAOC Ltd)”, Eni said in a statement.

NAOC, which also produces electricity, operates Oil Mining Licenses (OML) 60, 61, 62 and 63 through the NAOC joint venture with Oando and NNPC E&P Ltd. NAOC and Oando hold a 20 percent stake each in the joint venture while the remaining 60 percent is under the upstream arm of national oil and gas company Nigerian National Petroleum Co. Ltd. (NNPC).

The transaction, whose value has not been disclosed, also includes NAOC’s 48 percent and 90 percent operating interests in exploration leases 135 and 282 respectively.

NAOC currently contributes 40,000 barrels of oil equivalent per day to Eni’s production, according to Eni.

NAOC is also a partner in the Okpai 1 and 2 power plants, which have a combined capacity of 960 megawatts.

However, Eni and Oando agreed that Eni retains NAOC’s five percent interest in the Niger Delta-focused Shell Production Development Co. Joint Venture (SPDC JV).

Britain’s Shell PLC holds operatorship of the joint venture with a 30 percent stake, though it has entered an agreement to transfer its stake to Renaissance Africa Energy Co. Ltd. for up to $2.4 billion plus potential contingent payments. NNPC is the majority owner with 55 percent. France’s TotalEnergies SE has the remaining 10 percent, though it is also selling its stake to Nigerian-owned Chappal Energies Mauritius Ltd. for $860 million.

The SPDC JV, which has suffered oil spills and theft, holds 15 onshore leases that produce mainly oil. Three other SPDC JV licenses in shallow waters — OML 23, 28 and 77 — produce mainly gas, accounting for 40 percent of the West African country’s liquefied natural gas (LNG) supply, according to TotalEnergies.

In Nigeria, where Eni entered 1962, the company has an average annual production of 11 million barrels of oil and condensate and 63 billion cubic feet of natural gas, according to Eni.

Eni also holds a 10.4 percent stake in Nigeria LNG Ltd. (NLNG), which, according to NLNG figures, produces 22 million metric tons per annum (MMtpa) of LNG and five MMtpa of natural gas liquids.

Onshore Exodus

Eni said the divestment to Oando allows it to focus on its operated offshore assets in Nigeria. However, as with Eni’s stake in the SPDC JV, the company has decided to retain onshore assets in which it holds non-operated stakes.

“Following the transaction completion with Oando PLC, Eni will maintain its presence in Nigeria through Nigerian Agip Exploration and Agip Energy and Natural Resources, reiterating the company’s commitment to its employees health and safety, as well as to the environment”, Eni said September 4, 2023, announcing the sale agreement.

In Wednesday’s transaction update, it affirmed, “Eni remains committed to the country through investments in deepwater projects and Nigeria LNG”.

Shell and TotalEnergies had also said their exit from the SPDC JV would allow them to focus on offshore assets in Nigeria.

Shell integrated gas and upstream director Zoë Yujnovich said January 16, 2024, in the company’s announcement of the divestment to Ranaissance, “This agreement marks an important milestone for Shell in Nigeria, aligning with our previously announced intent to exit onshore oil production in the Niger Delta, simplifying our portfolio and focusing future disciplined investment in Nigeria on our Deepwater and Integrated Gas positions”.

Nicolas Terraz, president for exploration and production at TotalEnergies, said July 17, 2024, in a press release about the divestment to Chappal Energies, “TotalEnergies continues to actively manage its portfolio in Nigeria, in line with its strategy to focus on its oil offshore and gas assets”.

Exxon Mobil Corp. has also entered an agreement selling its equity stake in Mobil Producing Nigeria Unlimited to independent local player Seplat Energy PLC, as announced by the United States company February 25, 2022. Mobil Producing Nigeria holds a 40 percent stake in four oil mining licenses including over 90 shallow-water and onshore platforms and 300 producing wells, according to ExxonMobil.

To contact the author, email jov.onsat@rigzone.com