Tuesday, June 15, 2010

Nigeria's Oando to float local fuel arm by Q3


JOHANNESBURG (Reuters) - Diversified Nigerian energy company Oando Plc hopes to raise $250 million by floating a minority stake in its local fuel retail arm on the Lagos bourse by September.

The sale of up to 49 percent of the country's biggest fuel retailer, valued at $500 million by chief executive Wale Tinubu on Monday, is part of Oando's plans to transform itself into a major upstream energy company in Africa's biggest oil producer.

Oando was also in talks with Chevron, Shell and Agip to buy onshore blocks and areas of swampland believed to contain between 1 and 4 billion barrels of oil equivalent, Tinubu told reporters in Johannesburg.

He suggested $2 billion as a ball-park estimate of the total value of the assets concerned, but would not give further details.

The international oil majors are looking to offload the assets because of a "use it or lose it" clause in a new petroleum industry bill that forces the sale of proven reserves that have not been developed for 30 years, Tinubu said.

"This is the first time in our country's history that acreage that's been locked up for 30 years is being returned to the market," Tinubu said.

The bill is designed in part to increase Nigeria's overall oil production capacity from 2.5 million barrels per day to 4 million by boosting output in its little-developed swampy coastal areas.

The industry shake-up should also result in the emergence of a major domestic oil company -- a role in which Oando sees itself in only a few years' time.

Last month Oando, which is listed on the Lagos and Johannesburg bourses, reported a 105 percent increase in pre-tax profits for the first three months of 2010 to $34 million.

The firm raised $142 million in a rights issue in April to refinance its acquisition of upstream assets and provide operating capital, partly for new gas and power investment in sub-Saharan Africa's second-biggest economy.

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