Canada’s Africa Oil Corporation (AOI.TO) is set to dramatically expand its footprint in Nigeria’s lucrative deep-water oil sector. The company’s impending acquisition of full ownership of Prime Oil, scheduled for completion next Tuesday, promises to double both its production output and proven reserves within the West African nation, a strategic move poised to reshape its operational landscape. This expansion marks a pivotal moment for Africa Oil, solidifying its position as a key player in the continent’s energy market.
“On closing of that deal we will significantly change the scale of our business, we will double production, we double reserves and significantly boost our liquidity position,” stated Oliver Quinn, Chief Commercial Officer at Africa Oil, in an interview with Reuters. This bold assertion underscores the transformative nature of the acquisition, which will grant Africa Oil complete control over Prime Oil & Gas Coöperatief, a Dutch entity with substantial indirect stakes in Nigerian deep-water fields operated by industry giants TotalEnergies and Chevron.
The implications of this deal extend beyond mere numerical increases. Upon completion, Africa Oil anticipates a production surge to approximately 35,000 barrels per day. Notably, these barrels are characterized by their “very low lifting cost of under $10, so the margin on the barrels is high and typically sell at premium to Brent,” as Quinn emphasized. This translates to a substantial boost in profitability, directly impacting the company’s financial health and its ability to reinvest in future projects.
From an economic standpoint, this development is significant for Nigeria. Increased investment and production within the oil sector can contribute to economic growth, job creation, and revenue generation. However, it also raises questions about sustainability and the long-term impact on local communities. The dependence on oil revenues can create volatility, and it is crucial that these resources are managed responsibly to ensure equitable development.
Looking ahead, Africa Oil, in collaboration with its partners, plans to initiate an infill drilling campaign this year to sustain output in its mid-life fields. This proactive approach demonstrates a commitment to maximizing the potential of existing assets while exploring new opportunities.
Beyond Nigeria, Africa Oil maintains a presence in Equatorial Guinea and has a significant stake in Namibia’s promising Orange Basin, through its 40% share in Impact Oil and Gas, granting exposure to the Venus discovery. As reported, TotalEnergies, the operator, expects a final investment decision in 2026, potentially transforming Namibia into a major oil exporter by the turn of the decade. “Our focus is to add to the cash generation machine, which runs through the decade while on the backend Namibia Venus comes onstream and then we have significant growth in that asset,” Quinn explained.
For the average reader, this news signifies more than just corporate expansion. It represents the intricate interplay between global energy markets and local economies. It highlights the continued importance of oil as a driving force in Africa’s development, while also underscoring the need for diversification and sustainable practices. As we observe these developments, it’s essential to consider the human element – the potential for economic empowerment, the need for environmental stewardship, and the long-term well-being of the communities affected.
