"As a company, we have ambitions to produce a substantial amount of gas to power Nigeria’s economy via the Seven Critical Gas Development Projects (CGDP), two of which are within the NAOC JV, which will unlock almost 50% of the 42 trillion cubic feet that the 7 CGDPs aims to deliver by 2020.”

Ainojie ‘Alex’ Irune


December 10, 2019

How does Oando Energy Resources fit into the wider Oando group?

Oando started as a downstream company built on two key acquisitions – Unipetrol and Agip. These acquisitions formed the company that you know today - Oando. Having started out in the downstream, we swiftly grew to approximately 600 petrol stations across the nation, servicing one in every five cars on Nigerian roads, making us the leading oil and marketing retailer in West Africa. From the downstream sector, we evolved into the midstream where we pioneered the development of Nigeria’s foremost natural gas distribution network, building over 240 km of gas pipelines across three geographical regions in Nigeria – the Southwest, South-central and East – connecting gas to commercial customers. Through the use of our gas, we were able to scale down industry dependence on liquid fuels as well as reduce costs associated with powering big plants and factories.

Oando’s first foray into the upstream sector was in 2005 via our energy services business, which had the largest swamp drilling fleet in the country. This was at the height of uncertainty in the Niger Delta region; despite this we pioneered indigenous participation by drilling for the likes of Chevron and Eni. Through our upstream business, Oando Energy Resources (OER), we went on to acquire interests in marginal fields and partner with Eni on a deep-water asset; a game changer for us was the acquisition of ConocoPhillips Nigeria assets in 2014. This single acquisition catapulted us from producing approximately 4,500 barrels of oil a day to 50,000 barrels at peak, making OER the leading indigenous player in the upstream.

Today the Group is made up of two main companies, in the upstream and downstream trading sector. In the upstream, OER has six producing assets, three development assets and five exploration assets from which we obtain approximately 45,000 barrels of oil per day. We have over 470 million barrels in 2P reserves and annual revenue of approximately US$500 million. We directly employ 200 staff and indirectly over 1,500 personnel as part of our Joint Venture (JV) operations.  

Why did you decide to divest your midstream and downstream businesses?

In our evolutionary journey from a downstream player to a company operating in the full energy value chain, we acquired a significant amount of debt. Against this new reality of lower oil prices for longer, there was a pressing need to deleverage. Alongside this and even more significant was the realization that long-term sustainability meant that our business model had to be altered to fit in with a rapidly dynamic environment. A key imperative of this altered business model was to focus on our higher margin, dollar-earning businesses and as a balance sheet treatment, divest our naira earning and lower margin businesses. 

We sold our downstream business to a consortium of Vitol, the largest independent trader of energy products and Helios Investment Partners, a premier Africa-focused private investment firm and our midstream marketing business to Vitol. Both transactions occurred at a time when the Nigerian economy was going through a recession and Foreign Direct Investment (FDI) was at an all-time low. In a downturn, we were able to bring into the country over US$300 million of foreign investment, a testament to the value creation capacity of Oando and the quality of the businesses built.

What are Oando’s main highlights for 2019 and what is in the pipeline for 2020?

In 2019, our focus has been on increasing production across our assets as they still have significant oil reserves to last us another 30 years in terms of our reserves to production ratio. To this end, we increased our 2019 CAPEX budget significantly and focused on ramping up our drilling campaigns on these assets, the plan being to grow production, target deeper plays and book additional reserves. On the NAOC Joint Venture (JV), made up of Oando Energy Resources, Eni and the Nigerian National Petroleum Corporation (NNPC), we planned to drill eight new wells; I am happy to say that five wells have been successfully drilled and completed across three rig lines, and all have been hooked up. We also successfully appraised deeper plays and made significant discoveries, the most significant being the Obiafu-41 discovery located in OML61, onshore Niger Delta. The well confirmed approximately 1 trillion cubic feet of gas and 60 million barrels of associated condensate in the appraisal and exploration targets and at peak production is expected to reach a capacity in excess of 100 million standard cubic feet per day of gas and more than 3,000 barrels of condensate per day. On our Ebendo marginal field, we successfully side tracked our 7ST well and shored up net production by ~1.5k bopd.

As a company, we have ambitions to produce a substantial amount of gas to power Nigeria’s economy via the Seven Critical Gas Development Projects (CGDP), two of which are within the NAOC JV, which will unlock almost 50% of the 42 trillion cubic feet that the 7 CGDPs aims to deliver by 2020.

In 2020, we will see at least two drills on our marginal assets. In addition to this, we are looking to further optimize our production rate on our JVs to enable us deliver on our obligation to the domestic gas market, as well as to achieve an organic production of at least 60,000 barrels of oil per day.

What is the role of Nigerian indigenous companies like Oando in extending the life of all the fields that have been divested by IOCs?

I am of the strong belief that in a developing economy, a substantial amount of the capital that is generated from the production of oil must remain within that economy. This is what indigenous producers enable. We are Nigerian and every dollar we receive stays within the country. Oando has a long-term view that is focused on safety and sustainability. I believe that indigenous companies have a firsthand, close to the ground, sustainable approach to driving economic value creation through the sector.

How do you believe Nigeria is perceived by the international investment community?

I believe that there is a mix of perceptions but the one thing that cannot be denied is that the country is abound with opportunities.

Africa has seen record FDI flows in recent times, but not Nigeria. As a nation, we have suffered not just from the oil downturn, but also from instability and issues around pipeline security that have been an industry mainstay for an extended period of time. Today, Nigeria has shown significant improvement and we are seeing decreases in deferments or losses due to insecurity and unrest. Nigeria’s production rates have also increased significantly, with a high of 2.3 million barrels. 

Other bright spots in creating a more enabling environment include the institution of reforms that have seen Nigeria move up on the World Bank’s annual ease of doing business report to 131 out of 190 countries, 39 spots up from 2016 and 15 spots up from 2018.

History shows that as a country we have always encouraged capital to the industry; as the operating climate makes slow but steady improvement after the oil price crash, my expectation is that going forward we will continue to create an environment that encourages investment into the country and in the medium term that will change any negative perceptions international investors may have. 

Do you have a final message for our international readership?

Understanding our individual roles and responsibilities as governments, IOCs and indigenous oil companies has never been more critical. Labeled as the last energy frontier with substantial discoveries made over the last decade across the East African and Indian Ocean regions, Africa holds tremendous resource potential but most critical, potential for growth and development of its people. This growth must however be inclusive and must focus on: making education a fundamental priority, infrastructure build, development of strong governance models, de-bureaucratization and improved access to capital.

Firstly, governments must actively work to create an enabling environment for both economic and social development. Secondly NOCs, IOCs and indigenous oil companies should prioritize this development agenda and seek to support the continent through value adding commercial endeavors supported by active engagements with the public sector to drive policies in more favorable directions. Lastly, we must collectively take local content seriously, the transfer of skills, knowledge and resources from a full value chain standpoint to create capacity that will deliver on the continent‘s own resource ambitions sustainably.

Given the complexity and nuances of the continent there is a need to capitalize on local knowledge. As a proudly indigenous company, Oando has over the decades amassed the knowledge and understanding of the continent’s unique challenges, as well as a track record of successes across the energy value chain; we remain a partner of choice for companies looking to venture into this final frontier. On a final note, let us all be patient to prosperity, but impatient to development.


Mako Gold is expecting good results from its current drilling campaign in Côte d’Ivoire.
Andino Holdings comments on the factors influencing the chemical distribution market in Latin America for 2020.
Acrep Angola E&P analyses the difficulties of expanding in Angola during the pandemic and with lower oil prices.
Oxiquim speaks to GBR about the current trends in Chile’s petrochemical market.


Mako Gold is expecting good results from its current drilling campaign in Côte d’Ivoire.