Eni is latest energy giant to sell Nigerian onshore assets

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Italy’s Eni has agreed to sell its Nigerian onshore subsidiary to local company Oando , the two companies said on Monday. It is the latest international energy giant to divest onshore assets in the Oil-rich country. The Italian oil giant will however will keep its offshore activities in Nigeria.Eni has therefore reduced its exposure to Nigeria by unloading onshore assets.Other major oil companies have similar plans in the works.

With this deal on its Nigerian unit Agip Oil Company Ltd , Eni moves further in its long-term strategy to reduce oil exposure in favor of natural gas as this new unloading comes after a similar disposal in June of oil interests in Congo Republic.

Oando sad the acquisition would expand its horizons and bolster production levels, according to a statement it released. The company said the purchase opens up new opportunities for independent players in the Nigerian upstream sector.The acquisition has expanded its share of oil equivalent reserves by almost 1 billion barrels.

Neither company commented on the price. Investment bank Jefferies pegged the deal at more than $500 million.

Amid the ongoing issues of oil theft and spills, conflicts with communities, and reduced exploration budgets, international oil majors are beginning to move away from Nigeria’s onshore sector. Shell and Exxon Mobil Corp have started selling their assets in the region.

Major oil companies have maintained their investments in offshore Nigerian assets, usually the most productive source of petroleum for Africa. But they are hesitant to invest in resources and properties that they plan to eventually divest. This is partly due to a lack of security combined with years of inadequate funding plaguing production in the country.

The proposed sale of Exxon to Seplat, a local company , is stuck in regulatory limbo due to being opposed by NNPC Ltd, a state-owned oil company. Additionally, various court cases have further complicated matters for Shell’s assets that are up for sale.
NAOC Ltd. specializes in oil and gas exploration and production, and has stakes in four onshore blocks, two onshore exploration leases, and two power plants according to Eni. The transaction depends upon getting the necessary local and regulatory approvals. After the sale is completed, Eni will still retain its 5% stake in the Shell Production Development Company (SPDC) joint venture which is operated by Shell.

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