Italy's Eni (ENI.MI) has agreed to sell its Nigerian onshore oil and gas subsidiary to local oil company Oando (OANDO.LG), the two companies said on Monday, in the latest move by an international energy giant to divest onshore assets.
The sale of the Nigerian Agip Oil Company Ltd (NAOC), which is subject to regulatory approval, will nearly double Oando's reserves to 996 million barrels of oil equivalent, the Nigerian company said.
Oando added that the purchase would enable it to "significantly increase production" and "brings to bear the important role indigenous actors will play in the future of the Nigerian upstream sector."
It is also another step out of Nigeria's onshore sector for international oil majors, nearly all of whom, notably Shell (SHEL.L) and Exxon Mobil Corp (XOM.N), have sales underway amid rampant oil theft and spills, perpetual clashes with communities and more focused exploration budgets.
Investment bank Jefferies pegged the deal at more than $500 million. Neither company commented on the price.
"Eni reduces its exposure to a difficult region plagued by bunkering and other disruptions," Jefferies commented in a note on Monday.
Most oil majors, including Eni, have kept stakes in offshore assets in Nigeria, typically Africa's largest oil exporter, which has struggled to pump in the past several years due to theft and years of under-investment. Some oil majors are loathe to pour cash into developing assets they want to sell.
The country, which relies on oil for the bulk of its much-needed foreign exchange, urgently needs investment in the sector, but other sales have hit legal and regulatory hurdles.
Exxon's planned sale to local firm Seplat (SEPLAT.LG) is in regulatory limbo, and is opposed by state oil company NNPC Ltd, while court cases have complicated Shell's asset sales.
NAOC, which focuses on oil and gas exploration and production, has interests in four onshore blocks, two onshore exploration leases and two power plants, Eni said.
The deal is subject to local and regulatory authorisation. Similar approvals have been held back by legal and political issues in Exxon's and Shell's assets sales.
After the sale, Eni will retain the unit's 5% stake in the Shell Production Development Company (SPDC) joint venture operated by Shell, it said.
