Afreximbank Bolsters Oando’s Growth Trajectory with $375 Million Reserve-Based Lending Facility
The African Export-Import Bank (Afreximbank) has significantly strengthened its partnership with Oando Oil Limited, a prominent Nigerian energy company, by upsizing a reserve-based lending (RBL) facility to $375 million. This financial boost underscores Afreximbank’s commitment to fostering local content development within Africa’s oil and gas sector while empowering Oando to pursue ambitious production targets. The upsized facility replaces an earlier $525 million RBL agreement established in 2019, which Oando had diligently reduced to $100 million by 2024, creating the opportunity for refinancing and increased capital access.
RBL facilities represent a specialized financing mechanism tailored to the upstream oil and gas industry. These facilities enable companies to leverage their proven reserves as collateral, with loan amounts determined by the projected future production and revenue streams. The value of the reserves undergoes periodic reassessments to ensure alignment with prevailing market conditions and production realities. This type of financing provides companies with the necessary capital to invest in exploration, development, and production activities, ultimately driving growth and maximizing asset value.
The $375 million injection from Afreximbank is strategically aligned with Oando’s vision to significantly expand its operational capacity. The company aims to achieve a daily production output of 100,000 barrels of oil and 1.5 billion cubic feet of gas by 2029, a substantial increase from current levels. This ambitious growth plan reflects Oando’s confidence in the long-term potential of its asset portfolio and its commitment to contributing to Nigeria’s energy landscape. The Afreximbank facility will play a pivotal role in enabling Oando to invest in the necessary infrastructure, technology, and human capital required to realize these production goals.
The partnership between Afreximbank and Oando transcends mere financial support; it represents a shared vision for the future of Africa’s energy sector. Haytham Elmaayergi, Executive Vice President of Global Trade Bank at Afreximbank, emphasized the significance of this transaction in advancing local content development within the industry. Afreximbank’s long-standing relationship with Oando reflects the bank’s confidence in the company’s leadership and its commitment to sustainable growth. The involvement of Mercuria Asia Resources PTE Ltd, a global leader in energy and commodities trading, further strengthens the financial foundation of the deal and brings valuable international expertise to the table.
Wale Tinubu, Group CEO of Oando PLC, expressed his enthusiasm for the upsized facility, highlighting its strategic importance in maximizing the value of the company’s asset portfolio. The joint venture between Oando and Nigerian Exploration and Production Limited (NEPL) stands to benefit significantly from this influx of capital, with projected net cash flows exceeding $11 billion over the lifecycle of the reserves. This financial boost positions Oando to capitalize on emerging opportunities in the energy sector and solidifies its position as a key player in Nigeria’s oil and gas industry. The transaction signifies a vote of confidence in Oando’s long-term prospects and its ability to deliver substantial returns on investment.
Beyond its financial implications, the collaboration between Afreximbank, Oando, and Mercuria carries positive ramifications for Nigeria’s broader economic landscape. The increased investment in oil and gas production is expected to generate employment opportunities, stimulate infrastructure development, and facilitate technology transfer within the country. These ripple effects will contribute to economic diversification, enhance local capacity, and foster sustainable development within Nigeria’s energy sector and beyond. The partnership showcases the potential of collaborative efforts between financial institutions, energy companies, and international investors to drive positive change and unlock economic opportunities in Africa.
