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Why Oando divested 60% downstream equity for $461m

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By Kunle KALEJAYE
 
LAGOS-THERE are indications that Oando Plc, an  indigenous energy group operating in Nigeria may have agreed to divest 60 percent equity stake of its downstream business to HV Investments for US$461 million due to liquidity issues which may have arisen as a fallout of the ConocoPhillips acquisition.
Oil Tank farm

Oil Tank farm

HV Investments is a joint venture owned by Helios Investment Partners and The Vitol Group, and the acquisition.

Inside sources who preferred not to be mentioned opined that the company is majorly concerned with its new upstream acquisition and how to boost its daily crude oil production while maintaining a world class operational crew.
“it is highly capital intensive to operate in the upstream.  it is public knowledge what the company suffered under the last administration especially with regards to the Conocophillips deal and that was not a very good experience for the company.” he said.
According to statement signed by Oando’s Head of Corporate Communications, Mr. Ainoije Alex Irune explained that at the end of deal, HVI will own 60 percent of the special purpose vehicle, while Oando will hold a 40percent  stake.
For local content reasons the voting rights structure is as follows – HVI and Oando will each have 49 percent voting rights and a Nigerian Helios Affiliate Two percent  voting rights.
 
However, Oando’s CEO, Mr. Wale Tinubu stated that the deal is to help positioned the company’s  downstream for a new era of investment growth, profitability adding that the divestment also enables the company to increase its focus on upstream and midstream businesses.
 
The total consideration of US$461.3 million will be funded by a US$276.8 million cash contribution from HVI and US$184.5 million in preference shares issued to Oando PLC, subject to customary purchase price adjustments, including working capital and long-term debt. 
 
“This transaction is an exciting development in Downstream West Africa.
“By working with Vitol, a global energy and commodities company, and the largest independent trader of energy products, and Helios, a premier Africa-focused private investment firm, we have repositioned Oando Downstream for a new era of investment growth, profitability, and this venture holds unprecedented opportunities for the business. Importantly, this divestment also enables us to increase our focus on our upstream and midstream businesses.
“Even as proceeds of the sale will be applied almost entirely to reducing Oando’s leverage, we underscore the portfolio rationalisation achieved alongside the balance sheet optimisation,” Wale Tinubu said.
‎Tinubu added that the partial equity agreement presents a unique opportunity for a significant growth in the size and scale of the company’s operations, while substantially strengthening their position in the downstream sector. 
“Though we employ a multifaceted approach across the energy value chain, we have immense pride in our origins as a predominantly downstream company, and we had no reason to sell, as our brand deeply resonates with many in Africa and globally,” said Mr. Tinubu.
Oando downstream operations include: Oando Marketing PLC, a petroleum product retailing and distribution company with over 400 retail outlets and strategically located terminals in Nigeria, Ghana and Togo; Oando Supply
Trading Limited, an indigenous physical trader of petroleum products in the sub-Saharan region, supplying and trading crude oil and refined petroleum products; Oando Trading Limited, an entity involved in the trading of crude oil and refined petroleum products in international markets.
Others are Apapa SPM Limited, the marina jetty and subsea pipeline system capable of berthing large vessels that will increase the delivery capacity and offloading efficiency of petroleum products into major petroleum marketers’ storage facilities at Apapa, Lagos; and Ebony Oil & Gas Limited, the Ghanaian supply and trading entity with a provisional bulk distribution company license supplying white products.

Oil

NNPC Targets 60% Methane Emission Reduction By 2031

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The Nigerian National Petroleum Company Limited (NNPC) has unveiled a bold strategy to reduce methane emissions in the oil and gas sector by 60% by 2031, with an ultimate goal of achieving net-zero emissions by 2060.

This announcement reinforces Nigeria’s leadership role under the Global Methane Pledge initiative and its commitment to tackling climate change.

The Group Chief Executive Officer of NNPC, Mele Kyari, disclosed these plans during a meeting on Thursday with Robert Leahman, the U.S. State Department’s Global Methane Program Manager, and a delegation from Deloitte.

READ MORE: Atiku Gloats Over AUN’s Achievements Ahead Of 20th Anniversary

The discussions, held at the NNPC Towers in Abuja, focused on collaborative efforts to reduce methane emissions through innovative and sustainable practices.

“Reducing methane emissions is not just an environmental necessity but also a strategic imperative for Nigeria’s energy transition. We are leveraging partnerships to adopt global best practices and innovative solutions,” Kyari stated.

Key among these efforts is a pilot project in the Niger Delta, aimed at establishing emissions baselines, mitigating methane leaks, and promoting sustainable operations across Nigeria’s energy sector.

The project, a partnership between NNPC, Deloitte, and the U.S. Bureau of Energy Resources, will utilize data-driven methodologies to pinpoint and address methane hotspots.

Robert Leahman commended Nigeria’s proactive stance, describing it as a benchmark for other nations on the continent.

“Nigeria’s leadership under the Global Methane Pledge sets a standard for the continent. These initiatives will not only help reduce emissions but also drive sustainable development in the energy sector,” he said.

Kyari highlighted the broader benefits of addressing methane emissions, noting its significance for both environmental protection and economic efficiency.

“This collaboration is a game-changer. By addressing methane leaks, we’re reducing waste, saving costs, and protecting the environment. It’s a win-win for our economy and the planet,” he added.

 

 

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Oil

FG Introduces New Incentives To Revitalize Nigeria’s Oil & Gas Industry

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In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.

The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.

The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.

Read Also: Atiku Calls For Rotational Presidency Across Nigeria’s Geopolitical Zones

These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.

The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.

This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.

These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.

The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.

 

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Tinubu set to approve ExxonMobil-Seplat oil deal, expands CNG bus initiative

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By Yemie Adeoye

NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.

The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.

“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”

The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.

“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.

Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.

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