Oando to Expand Midstream Operations Following $115.8m Helios Deal

Nigeria’s leading indigenous energy group and the leading integrated energy solutions group in sub-Saharan Africa,

Oando Plc, has completed a $115.8 million partial divestment of its midstream subsidiary, Oando Gas and Power Limited, to Glover Gas and Power B.V. (OGP), a special purpose vehicle owned by Helios Investment Partners LLP, a premier Africa-focused private investment firm.

Commenting on the completion of the transaction, Oando Plc’s Group Chief Executive, Jubril Adewale Tinubu, said: “The commencement of this strategic partnership underlines Oando’s status as the indigenous partner of choice for international firms in our industry, while also acknowledging the group’s unwavering commitment to improving access to gas and power solutions for industries, consumers and commercial counterparties in the sub-region. This partnership will firmly leverage OGP’s local knowledge and expertise,alongside Helios’s global network and financial capabilities to optimise our existing operations and expand our footprint.”

The deal which was initially announced on September 19, 2016, will see Helios acquire 49 per cent in voting rights, while injecting cash into OGP and the larger Oando group.

Co-founder and Managing Partner of Helios Investment Partners, Tope Lawani added: “The completion of this transaction underscores Helios’ commitment to investing in businesses that deliver energy access solutions to industries and consumers across the continent. We look forward to working closely with the OGP management team and other industry stakeholders to consolidate the company’s position as a premier provider of cost-effective and reliable gas and power infrastructure.”

OGP is the pioneer developer of Nigeria’s foremost natural gas distribution network and has subsequently grown to become the largest private sector gas distributor in Nigeria, delivering at peak, 70 million standard cubic feet per day (“mmscf/d”) to over 175 industrial and commercial customers via a vast network of gas infrastructure.

With over 260-kilometre pipeline infrastructure built, OGP provides unique energy solutions in South-east and South-west Nigeria primarily through its subsidiaries: Gaslink Nigeria Limited (Gaslink), Gas Network Services Limited (GNSL), and Central Horizon Gas Company (CHGC).

In May, OGP announced the development of a revolutionary mini Liquefied Natural Gas (LNG) facility via its newly-created Transit Gas Nigeria Limited (TGNL) subsidiary in Ajaokuta, Kogi State. This was a welcome development for the oil and gas sector, as it sees the industry improve its supply across the country, utilising cutting edge technology of mini LNG to reach areas with limited physical infrastructure.

The pioneering 20 mmscf/day liquefaction plant would aim to fulfill the gas supply requirements for captive power plants, embedded generation, and industrial clusters in the Northern region, as well as stranded customers in Southern parts of the country.

The midstream subsidiary is also completing extension works to its Greater Lagos gas infrastructure along the Ijora-Marina axis to provide power solutions for industrial and commercial businesses with the area.

Extensive additions are also being made to CHGC’s gas network in the Trans-Amadi area of Port Harcourt.

Amid a global downturn and pressured crude oil prices, the deal is another defining moment in Oando’s optimisation of its balance sheet and asset portfolio. By proactively implementing a strategic direction centered on self-sustaining entities, the company is addressing its immediate objective of aggressive debt reduction while remaining a viable player in the sector.
The company recently restructured a N94 billion Medium Term Loan (MTL) facility for an additional five years while reducing its interest rate burden. Other strategic deleveraging initiatives undertaken by the company to enhance its operational and financial positioning include the N2.8 billion farm out of its EEZ 5 and 12 blocks, and the N3.7 billion sale of its Akute Independent Power Plant.

The new gas and power partnership with Helios is also testament to Oando’s legacy of continuous growth through audacious acquisitions and successful partnerships, most notably its landmark $1.5 billion acquisition of ConocoPhillips Nigeria in 2014, which positioned it as Nigeria’s largest indigenous crude oil producer at 55,000 boep/d. The transaction remains the first and only acquisition of an IOC operating in Nigeria by an indigenous firm.

Since 2011, Helios has made investments in the African oil and gas sector, and partnered Vitol to purchase an estimated $1 billion 40 per cent stake in the African downstream fuels business of Royal Dutch Shell.

Oando also completed a $210 million recapitalisation of its downstream business with the consortium earlier in the year, highlighting its indigenous partner of choice status, operational capacity, and renewed confidence in the Nigeria’s long term economic viability.