Nigeria's oil firms score big on transactions

Nigeria's oil and gas sector is witnessing a significant shift with the planned acquisition of the 100 per cent stake of Nigerian Agip Oil Company Limited by Oando Plc. This move reflects the growing strength of indigenous oil and gas firms in the country's energy industry. Adeoye Adefulu, a Partner at Odujinrin and Adefulu, shared valuable insights on this development in a recent CNBC Africa interview. The sale of Agip to Oando underscores the progress made by indigenous companies in the sector since the CEPLAT transaction in 2010, where several local firms have excelled and expanded their operations. Companies like First EMP, Walter Smith, ND Western, and CEPLAT have not only increased production from acquired assets but have also undertaken significant developments to enhance their output. This trend showcases the capabilities of Nigerian companies in driving growth and empowering local talent to serve the nation better. While the acquisition by domestic players is a positive step for the industry, it also comes with challenges inherited from international oil companies (IOCs) such as oil theft and community clashes with local areas. Addressing these issues requires a collaborative effort from all stakeholders in the sector. Adefulu emphasized the need for a collective revitalization of Nigeria's oil and gas industry to boost reserves, enhance production levels, and increase revenue per capita. This involves a mix of operators, including indigenous firms, IOCs, NOCs from various nations, and middle-level players entering the market to improve the business landscape. Enhancing the investment climate, security conditions, and fostering trust between government, companies, and communities are vital for industry progression. The introduction of initiatives like the host community fund in the Petroleum Industry Act (PIA) aims to promote sustainable operations and community engagement. Despite recent improvements in security, more significant investments are required in the Niger Delta region to uplift infrastructure and education, given the area's crucial role in national resource production. The future outlook for local players hinges on their commitment to driving investments, despite capital challenges and hesitancy from Nigerian banks to fund large-scale ventures in the oil and gas sector. Companies like Oando's bold move to acquire Agip's assets demonstrate confidence in the market's potential, signaling a positive trajectory for indigenous firms stepping up as key contributors to Nigeria's energy landscape. As the industry evolves, stakeholders must navigate challenges, foster partnerships, and prioritize sustainable growth to propel Nigeria's oil and gas sector to new heights.