Oando in Angola: Onshore Kwanza Basin Operations

Oando: A Nigerian Independent Crossing Into Angola

Oando PLC, one of Nigeria’s largest indigenous energy companies listed on the Nigerian Exchange (NGX), has expanded into Angola through the award of Block KON-17 in the onshore Kwanza Basin during ANPG’s licensing programme. Oando’s entry into Angola represents a significant cross-border investment by an African independent E&P company and aligns with both Oando’s growth strategy and Angola’s objective of diversifying its upstream investor base beyond traditional European and American majors.

Company Overview

Corporate Profile

• Founded: 1956 (as Esso West Africa, subsequently localised)
• Headquarters: Lagos, Nigeria
• Listing: Nigerian Exchange (NGX)
• Core business: Upstream E&P, midstream gas processing, and downstream distribution
• Key assets: OML 13 (Nigeria), Block KON-17 (Angola)
• Production (Nigeria): Approximately 40,000 to 50,000 boed from Nigerian assets

Oando has built its reputation as one of Nigeria’s most successful independent energy companies, with operations spanning the full petroleum value chain. The company’s upstream subsidiary, Oando Energy Resources (OER), holds interests in multiple Nigerian oil mining leases, with production predominantly from onshore and shallow water assets.

Angola Operations: Block KON-17

Block Overview

Block KON-17 is located in the onshore Kwanza Basin, one of Angola’s sedimentary basins with both conventional and unconventional petroleum potential. The block was awarded to Oando during ANPG’s 2019 onshore Kwanza Basin licensing round, the first round in the agency’s six-year programme.

Key block parameters:

• Location: Onshore Kwanza Basin, central-western Angola
• Area: Several thousand square kilometres
• Geological setting: Cretaceous-age sedimentary section with conventional clastic and carbonate targets, overlying a Precambrian basement
• Exploration stage: Early exploration, with limited historical well penetrations in the licence area

Geological Potential

The onshore Kwanza Basin is geologically complex but potentially rewarding:

• Conventional targets: Cretaceous sandstone and carbonate reservoirs deposited in rift, sag, and post-rift settings. Analogues include producing fields in the offshore Kwanza Basin (e.g., the Kaminho discovery in Block 20/21 operated by TotalEnergies) and in the conjugate Brazilian margin.
• Source rock maturity: The Bucomazi Formation, the primary source rock in the Kwanza Basin, is thermally mature for oil generation across much of the onshore area, based on regional geochemical data.
• Structural traps: Seismic data indicates numerous structural closures associated with salt tectonics and rift-related faulting that could trap hydrocarbons.
• Unconventional potential: The organic-rich Bucomazi shales also have theoretical unconventional (shale oil/gas) potential, though this has not been tested and remains conceptual.

Work Programme

Oando’s work programme for Block KON-17 includes:

• Acquisition of 2D and/or 3D seismic data across the licence area
• Geological and geophysical interpretation to identify drilling targets
• Drilling of one or more exploration wells during the initial exploration period
• Environmental impact assessment and local content plan implementation

The total exploration expenditure committed by Oando for Block KON-17 is estimated at USD 30 to USD 80 million, depending on well outcomes and the scope of seismic acquisition.

Strategic Rationale

Diversification Beyond Nigeria

Oando’s entry into Angola is motivated by several strategic factors:

1. Geographic diversification: Nigeria’s upstream sector, while large, faces regulatory uncertainty (Petroleum Industry Act implementation), security challenges (Niger Delta militancy), and fiscal complexity. Angola offers a different risk profile with improving fiscal terms under Decree 8/24 and a stable regulatory environment under ANPG.

2. Onshore expertise transfer: Oando’s Nigerian operations are predominantly onshore and shallow water—the same operational environment as Block KON-17. The company’s experience in onshore drilling, production operations, and community relations in Nigeria is directly transferable to Angola.

3. Pan-African ambition: Oando has articulated a vision to become a pan-African energy company, with Angola as the first step in a geographic diversification that could eventually include other West and East African markets. The oil block farm-in opportunity tracker lists current prospects for new market entrants.

African Independent Advantage

As an African-owned company, Oando brings a different value proposition than the European and American majors:

• Cultural affinity: Shared African business culture and an understanding of operating in complex, government-led regulatory environments
• Cost structure: Lower overhead and expatriate costs than international majors
• Local content alignment: Oando’s profile as an African-owned company resonates with Angola’s local content objectives, though the specific requirements under Decree 271/20 distinguish between Angolan-owned and non-Angolan African companies
• Risk appetite: Greater willingness to invest in smaller, onshore opportunities that the majors overlook

Challenges

Capital Constraints

Onshore exploration in Angola, while less expensive than deepwater, still requires significant capital. Oando’s financial capacity—constrained by its Nigerian operations’ cash flow and limited access to international capital markets—may limit the pace and scale of its Angolan programme. The company may seek farm-in partners to share exploration risk and capital requirements.

Operating in a New Jurisdiction

Despite cultural similarities, Angola and Nigeria are distinct regulatory, legal, and fiscal environments. Oando must navigate Angola’s Portuguese-language legal system, ANPG regulatory requirements, foreign investment registration, and foreign exchange regulations, all of which differ from Nigerian practice. Engaging experienced Angolan law firms and consulting firms is essential.

Geological Risk

The onshore Kwanza Basin is underexplored relative to the offshore. Historical exploration results have been mixed, with some dry wells and limited commercial discoveries. Oando’s geological thesis will be tested by seismic data quality, well results, and the presence (or absence) of viable hydrocarbon accumulations in the Block KON-17 licence area.

ESG and Community Relations

Oando’s ESG approach in Angola draws on its Nigerian experience, where community relations and environmental management are critical operational success factors. Key ESG considerations for onshore operations include:

• Land rights and community engagement: Onshore petroleum operations in Angola affect communities with agricultural, pastoral, and customary land use. Free, prior, and informed consent (FPIC) processes and transparent benefit-sharing arrangements are essential.
• Environmental protection: Onshore operations require careful management of drilling waste, produced water, air emissions, and land disturbance. Environmental impact assessments under Decree 51/04 apply to all exploration activities.
• Employment creation: Onshore operations create direct employment opportunities for local communities—a significant advantage over offshore developments where most jobs are based on remote platforms.

Implications for Angola’s Upstream Sector

Oando’s presence in Angola has broader implications:

1. Investor diversification: Angola’s upstream investor base has been dominated by European and American majors. The entry of a Nigerian independent demonstrates that Africa’s own oil companies can participate in the country’s petroleum sector.
2. Onshore development: The international majors have focused almost exclusively on deepwater blocks in Angola. Oando’s commitment to onshore exploration could help develop an overlooked resource base.
3. Regional integration: Oando’s cross-border investment strengthens petroleum industry ties between Angola and Nigeria, sub-Saharan Africa’s two largest oil producers.

Conclusion

Oando’s Block KON-17 award in Angola represents a bold strategic move by one of Africa’s most established independent energy companies. The onshore Kwanza Basin offers genuine geological potential, and Oando’s operational experience in similar environments in Nigeria provides relevant expertise. However, the challenges of operating in a new jurisdiction, geological risk, and capital constraints mean that success is not assured. If Oando makes a commercial discovery in Block KON-17, it would validate both the company’s diversification strategy and ANPG’s policy of engaging African independents in Angola’s licensing programme—a positive outcome for the continent’s energy industry.