Oando growth impulse: Wale Tinubu and squad are back on the road
Sopuruchi Onwuka
While celebrations and plaudits still ring in the air after indigenous energy independent company, Oando Plc, bought out two international oil companies from a joint venture with government, the drivers of the local company are still relentless in hunting for more assets to satiate a voracious appetite.
The Oracle Today reports that indigenous Oando Plc is straight out in the African industry space to seek more acquisition opportunities in a visible ambition to become leading continental oil stalwart.
The Group Chief Executive (GCE) of the company, Mr Wale Tinubu, was abroad with his full management team at the deal making African Energy Week, Cape Town, forging new alliances, striking cooperation accords, exploring acquisition opportunities and driving strong advocacy for transition of oil asset control to indigenous African companies.
The 2024 Africa Energy featured some of the most aggressive marketing platforms for African petroleum producers that luring global investors with congenial operating environment, attractive fiscal incentives and low entry thresholds for asset acquisition.
From Nigeria to Gabon, Equatorial Guinea, Angola, Senegal, South Africa and many more sub-Saharan African countries with new and evolving petroleum plays, investment road shows and licensing round schedules dominated country spotlights and investment shows.
But whereas countries welcomed every international investible funds as part of the race in development of their petroleum resources ahead of energy transition deadlines; Oando led strong advocacy for African resource control, arguing that time was ripe for the governments of the continent to review their economic targets from the fast depleting and increasingly vulnerable resource.
The launch out by the Oando executives indicates a very strong and aggressive drive to pursue inorganic growth in the continental space, and possibly build an broader alliance sphere that prints its brands as African petroleum colossus.
The hunt for more assets comes at a time Oando successfully completed full acquisition of Eni’s onshore affiliate in Nigeria and assuming control of operations in the petroleum exploration and production joint venture with the Nigerian National Petroleum Company (NNPC) Limited in assets located onshore and in swamp terrains of the Niger Delta.
Consequently, the former NNPC/Agip/ConocoPhillips joint venture has become the current NNPC/Oando joint venture, marking one of the boldest inorganic growth strides only rivaled by indigenous Seplat Energy Plc in the Nigeria operating environment.
However, as most peers struggles with in-country issues related to acquisition transactions, indigenous Oando Plc is straight out in the African industry space to seek more acquisition opportunities in a visible ambition to become leading continental oil stalwart.
The Oracle Today reports that the Oando brand loomed very large at the 2024 African Energy Week (AEW) Investing in African Energies hosted by the African Energy Chamber in Cape Town, South Africa.
From conference badge bands, pavilion decoration, onscreen displays to onstage backdrops, the Oando logos and colors dominated the optics, projecting the company as the biggest elephant in the room.
And the company’s executives who featured in several panel discussions were citing specific growth successes in the company’s evolution time lines to drive home strong arguments that time has come for indigenous African companies with demonstrable strategic capacity to be supported with access to oil assets in the continent.
In leading discussions with a keynote address on Mergers and Acquisitions in the African petroleum play, Mr Tinubu made it clear that international oil companies (IOCs) in the continent are no longer going to lead investments due to climate related considerations. He pointed at the strategic shift in the focus of the IOCs from oil rich assets to gas prone reserves.
The global movement for transiting energy demand from fossil fuels, he argued, has left Africa in the cold but also presented the opportunity for the governments in the continent to harness evolving indigenous capacity to drive development and lift the population out of poverty.
“Collaboration must begin within the continent where there is growing indigenous capacity, indigenous institutions that can be created and developed,” he told the delegates, paying tribute to the efforts of the African Petroleum Producers Organization (APPO) at establishing the first energy bank for the continent, and the relentless efforts of the Afrexim Bank in supporting indigenous companies in their growth journeys.
“With indigenous institutions, we need to drive the industry with indigenous solutions,” Wale Tinubu emphasized, stressing that “a continent that has over 40 percent energy deficiency cannot be restrained from using its abundant hydrocarbons to alleviate energy poverty.”
Mr Tinubu’s argument plugs directly into the position of the governments of the continent at the ongoing COP29 in Baku, Azerbaijan, that Africa must be allowed to use its vast petroleum resources to address energy poverty and also fund development of new energies.
And with the IOCs shifting their focus and divesting significant oil portfolio’s in the continent, he noted, the production of African oil producers have suffered disappointing fluctuations in a peak-and-drop trend that inflicts economic instability.
In pointing at the prevailing low production to reserves ratio in the continent and the waning verve of IOCs to lead new investments, Mr Tinubu noted the urgent need to arrest peak-and-drop trend in the continent by transferring control of underperforming assets from IOCs to indigenous independents.
In relating the situation to the topic of debate, Mr Tinubu declared that merger and acquisition opportunities still exist as “there are many floundering oil and gas assets in the hands of the majors which can be released to indigenous players.
“With government and financial support, those assets can be revived from declining producers to incremental producers.”
In calling for effective and efficient integration in the continent, he said mergers have created some big players in the continent, especially in Nigeria where, according to him, indigenous companies will be responsible for over 50 percent of production by 2050.
He stated that the role of Nigerian independents in the future control of the country’s production is primarily the direct outcome of the transition of ownership in locations where there are facilities and infrastructure in place.
Indigenous companies, according to him, are better in overcoming community, security and other issues that constrain production in the operating environment.
In pointing at the role of institutions, Mr Tinubu pointed at the Nigerian Content Development and Monitoring Board (NCDMB) and its tasks in mobilizing local resources and improving business climate to enhance the performance of indigenous companies.
Wale narrated how Oando launched into upstream in 2002 after establishing in the downstream in 1994. He stressed that the company has continued to grow through mergers and acquisitions involving major companies in the Nigerian petroleum sector.
In flaunting the potentials of the company to lead the emerging African upstream setting, he also noted how the company has scaled from a fledgling marginal asset interest holder to acquiring joint venture interests of ConocoPhillips in 2014 and buying NAOC in 2024 to become a key player in the country.
With reserves base in excess of a billion barrels and operatorship of an exciting JV with the Nigerian National Petroleum Company (NNPC) Limited, Wale said Oando was working to utilize its capacity to address key traditional issues that bog the Nigerian oil industry.
He said the company’s control of the NNPC/Oando Joint Venture would reverse traditional cost escalation in the domestic upstream industry, propel production increase, galvanize capital within the local environment, deal with issues in operating environment, and to drive business expansion.
“In a rapidly evolving market, M&A is becoming a vital strategy for enhancing operational resilience and securing resources,” he stated, adding that what is now required is the building of institutions that would support sustainable capacity growth that leads to African economic independence and energy security.
“Building African institutions is feasible. It is only going to be possible if we know how to regulate ourselves, finance ourselves, and build enabling environment for indigenous capacity development,” Wale declared.
He added that whereas the IOCs have played in the continent without yielding significant development for local economies; divestments would now offer a new era of opportunity for indigenous companies to domicile resource value in the domestic economies and salvage local currencies from embarrassing devaluation.
“We expect that indigenous firms will control up to 40 percent of Africa’s production,” Wale said, adding that “the world will still need oil in the foreseeable future and the indigenous companies have opportunity to seize the hiatus and dominate the industry.”
Focusing on export will improve the balance of trade, he explained, adding that the petroleum sector holds the solution to the foreign exchange crises challenging most African countries.
Wale called on African countries to encourage their stock exchanges, debt markets and pension funds to see the oil business as fundamental channel of securing the foreign exchange stock required to boost the value of their local currencies.
The Oracle Today reports that the message of positioning African independents to dominate the continental petroleum play in the face of changing global energy industry remained the central argument of all Oando delegates and panel discussants at the AEW in Cape Town.
Executive Director, Oando Plc, and Managing Director of Oando Energy Resources (OER), Dr Ainojie Alex-Irune
The policy advocacy by the company is a replay of Wale’s arguments in the Nigerian petroleum industry in the past 20 years during which he championed the call for divestment of dormant assets held by IOCs in the country.
The policy advocacy which gathered momentum on the platforms of policy debate has since led to a wave of divestment programmes that provided launching pod for establishment of Nigerian indigenous independents like Seplat, First Hydrocarbon, Neconde, Aiteo, Renaissance and several others including the current version of Oando.
Armed with the time tested advocacy that has transformed the Nigerian petroleum industry with upspring of vibrant indigenous companies, Wale and the gang are once again abroad on the continental space to position for a next phase of new industry order being triggered by prevailing campaign for climate action.
While a parallel argument rages over the desirability of continued fossil fuel consumption in the face of extreme weather conditions attributable to climate change, Wale is unapologetic at the conference when he ruled out any debate on whether African should continue with exploitation of petroleum resources to drive development, address energy deficits and assuage poverty.
He offered Oando to African governments as the partner of choice. He pointed at the company’s formidable track record of resilience, capacity and operational strategies required to lead the charge in enabling Africa assume control of its energy future.
