Oando to invest $750 million in drilling program, expecting funding boost from Iran turmoil
Oando, a Nigerian energy company, plans to raise $750 million this year to fund a drilling campaign which could increase production by 300%. This is to tap into the improved investor appetite that West African producers are experiencing amid turmoil related to the Iran War, according to CEO Wale Tinubu.
Oil and Gas Company is a local company that has acquired assets from oil companies in the last decade, as they leave Nigerian shores. Tinubu stated that this year, the surge in energy prices will open up more funding options for producers.
Tinubu said: "We are working very hard to get the funding we need for an extensive drilling campaign."
Nigeria is Africa's largest oil producer. It produces crude and condensate at a rate of around 1.6 millions barrels per day.
Oando's production in fiscal 2025 averaged just over 32,000 barrels per day of oil equivalent. It aims to increase output by drilling up to 100 wells, especially from assets acquired from Western majors ConocoPhillips, and Eni.
Tinubu stated that investors had previously been reluctant to fund drilling in Africa due to concerns that it was a "unsafe environment". However, the Iran 'war' and Russia's invasion in Ukraine in 2022 has changed this view.
He said that "Africa is very peaceful in comparison to these other regions."
Tinubu has already said that there is a shift in the demand for Nigerian crude oil, with more cargoes heading to Asia to replace Gulf Oil trapped by the Strait of Hormuz.
FUNDING SQUEEZE?FROM EUROPE
Oando raised between $3 and $4 billion over the past decade. The CEO stated that the majority of the money was raised from European banks.
He said that European banks have almost entirely withdrawn from African hydrocarbons because of climate concerns. Oando was urged to seek funding through the African Export-Import Bank, the African Finance Corporation and oil trading companies such as Vitol Trafigura Glencore Mercuria and Vitol.
He added that Africa needs more "substantial funding on a long-term basis".
He said that more Gulf banks are interested in hydrocarbons projects in Africa, and more parties join their syndications. Private equity funds and hedge fund also have a greater interest in financing African energy.
Oando has recently expanded to Angola and Tinubu says they are looking at opportunities in Ghana and Ivory Coast. Africa should pool the capital it has at home via pension funds, and other sources to finance large-scale capital projects, he said.
He said that geopolitical turmoil would have "long-reaching implications" for the global energy security.
He said that "even if the ceasefire persists, which I hope it does, it won't change the reality of the disruptions you will find."
Business Opportunities with GASOLINE Exports
Tinubu stated that Nigeria is in a good position to attract funding following a 2021 landmark overhaul of its hydrocarbon laws and the reforms made by Bola Tinubu's uncle to the currency and expensive petrol subsidies.
Tinubu said that the new Dangote oil refinery, which produces?650,000 barrels per day, on the outskirts Lagos, showed the value of Nigerian resources.
Tinubu, which was once one of the largest fuel importers in the country, stated that imports are now only needed to test pricing or for refinery maintenance.
Tinubu's long-term goal is to use some of Oando’s gas production for petrochemicals, fertilizers and other products to boost the value of Nigerian resources.
The company is working to "streamline financials" to avoid further delays with filing audited accounts at the Nigerian Exchange following deadline extensions in previous years.
Oando’s board approved a proposal in August to launch a programme to issue multi-instruments up to $1.5billion. (Reporting and editing by Karin Strohecker, Jan Harvey and Libby George)
(source: Reuters)
