Barely a month Oando Plc, a leading indigenous integrated oil company announced investment of $500 million in acquisition of oil rigs, the company concluded purchase of Shell’s two offshore blocks at the weekend.

The Anglo-Dutch oil giant was said to be completing the sale of its share in two offshore oil licences in the country to Oando. Oando was said to have defeated its rival Chinese National Offshore Oil Company (CNOOC) in the bid. CNOOC is China’s biggest offshore producer.

A report by Financial Times said the executives of Oando were in Europe on Friday to seal the deal adding the company is also sealing transaction with Merrill Lynch to secure a $400m facility

"The executives were on Friday in the Hague to tie up the final details of the sale. Oando’s bid will make it the first Nigerian company to secure producing assets from any multinational operating in Africa’s biggest oil producer.

Sources close to the deal said that Oando had secured a $200m (£102m) facility from Merrill Lynch to help it finance the deal.

The sources added that Oando was also looking to secure up to $400m of further financing to be secured by the producing assets which it is acquiring from Shell.

The sale of the assets was contested by a number of Nigerian groups, as well as CNOOC, China’s largest offshore producer that has dramatically expanded its presence in Africa over the past three years," the report said.

Oando’s bid will make it the first Nigerian company to secure producing assets from any multinational operating in Africa’s biggest oil producer, the report added.

Oando is Nigeria’s largest domestic energy group that is listed in Nigerian Stock Exchange and that of Johannesburg in South Africa. The cost of the assets was not mentioned.

Efforts to reach the Group Managing Director of Oando Plc, Mr. Wale Tinubu and Shell’s spokesman in Lagos for comments on the deal were unsuccessful.

Shell was said to have begun began the process of divesting the two producing licences last year. The company suffered funding shortfall as a result of security issue in the Niger Delta that lead to shut-in of operations. Oando’s bid will make it the first Nigerian company to secure producing assets from any multinational operating in Africa’s biggest oil producer.

Oando in the last two years has engaged in substantial investment and expansion in the upstream activities.

The Group Managing Director, Wale Tinubu said the company would invest $250 million in its operation this year. "We are investing $100 million in rigs, $45 million in sub-marine pipelines in Apapa and $60 million in 120-kilometre gas pipeline in East of Nigeria, from Ukanafo in Akwa-Ibom State to Calabar in Cross River State. We are also spending about $60 million on our exploration and production assets primarily oil prospecting licenses (OPLs) 236 and 278 this financial year.

"The rigs we have acquired are going to contribute in this year’s revenues. The rigs we will buy this year, will contribute in the next year’s revenue directly and at a very good rate. Submarine pipelines will commence contribution in 2010, less than two years from now. The industry spends over $6 million a month in lightering just to bring in products into Apapa. By providing this submarine pipeline system will be reducing the cost of that lightering and would be able to import products at much cheaper cost.

The gas pipeline in Akwa-Ibom will come on stream this financial year and our first client, the Unicem, has a billion dollar cement factory, which is being built in Calabar. We will be feeding that project with gas.

"In the last financial year, we made in excess of N10 billion as earnings before interests, depreciation, taxes and amortization. This year, we are shifting to about N15 billion and by 2009, we should see at least 60 per cent yean on year goes and over the next five years. I reckon that by year five, we should be at between 25 and 30 billion naira earnings before interests, depreciation, taxes and amortisation.

"We are just finalising the land acquisition. We will be moving into the front end engineering design (FEED) stage. In the interim, we are going to build a large import terminal on the same location, which we say that the tanks we should use for the import would end up becoming export tanks when the refinery is completed. We will build the phase 1 of the refinery, which is the tank farm while the phase 2 will be the core refinery itself and we should expect it to be operational over the nest five years.