Following Federal Government’s refusal to assent to ExxonMobil’s sale of its 40 per cent stake in four oil mining licences to Seplat Energy Plc, the transaction which was almost concluded has been put on hold or temporarily cancelled pending a change of decision by the government, The Business Intelligence Africa (TBI Africa) has learnt.
ExxonMobil had finalized the planned sale of 40 per cent stake of Mobil Producing Nigeria Unlimited (MPNU) in four oil mining leases (OMLs) 67, 68, 70, 104 and associated infrastructure including the Qua Iboe Terminal, one of Nigeria’s largest export facilities, to Seplat Energy Plc. The two companies were waiting for regulatory endorsement to the deal when the Federal Government suddenly declined approval to it last week.
Our correspondent gathered that the Nigerian National Petroleum Company Limited (NNPC) was instrumental to government’s refusal to approve the deal. The NNPC, which will soon begin to operate as a private company, wanted to have the juicy assets.
A source close to the deal said the NNPC wants to grab as many energy assets as possible to enhance its profitability going forward. “Don’t forget that NNPC will soon become a player just as any other private company in the oil and gas industry, and will be in competition for survival and profitability. The national oil company isn’t just aiming to be the oil and gas company in Africa but wants to play in all the energy value chain.
“The NNPC was allegedly said to have offered to pay more for the assets but Mobil wasn’t willing to accede to the offer as Seplat emerged from a competitive bidding to clinch the assets and it would be unfair to backpedal as sell the assets to NNPC,” the source said.
What it means is that it is as if no transaction took place, MPNU will continue to own and operate the assets until there is a change of mind on the part of the government. But remember that Seplat management aren’t also folding their arms, they are making consultations at the highest level to ensure the deal holds as planned, the source added.
On whether the government has the powers to compel Mobil to sell the assets to NNPC, the source said constitutionally, there is no provision in law that grants the government such powers although the NNPC has the first right of refusal to such sale, Mobil is the rightful owner of the stakes put up for sale. Government’s refusal to approve sale of the assets to Seplat will only be delayed until otherwise. But status quo will be maintained and Mobil continue to operate the assets.
An earlier statement signed by Manager, Media and Communications, Mobil Producing Nigeria Unlimited, Oge Udeagha, said: “This sale will allow us to prioritize competitively advantaged investments in our strategic assets, and it supports the Nigerian government’s efforts to grow its oil and gas operations,” said Liam Mallon, president, ExxonMobil Upstream Oil and Gas. “We value the relationships we have spent decades building with the government and people of Nigeria, which will continue as we maximize the value from our deepwater operations.”
When finalized, the sale will include the Mobil Development Nigeria and Mobil Exploration Nigeria equity ownership of Mobil Producing Nigeria Unlimited, which holds a 40 per cent stake in four oil mining licenses, including more than 90 shallow-water and onshore platforms and 300 producing wells.
Seplat Energy in an earlier statement noted that the MPNU portfolio primarily consists of: 40 per cent operating ownership of four oil mining leases (OMLs 67, 68, 70, 104) and associated infrastructure; the Qua Iboe Terminal, one of Nigeria’s largest export facilities; 51 per cent interest in Bonny River Terminal and Natural Gas Liquids Recovery Plants at EAP and Oso.
However, the transaction does not include ExxonMobil’s deep-water assets in Nigeria. MPNU will operate as a standalone subsidiary of Seplat Energy and upon closing and following receipt of requisite regulatory approvals.
The Federal Government in a letter disapproving the ExxonMobil, Seplat deal cited overriding national interest, among others.
The Chief Executive, Nigerian Upstream Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, stated these in two separate letters addressed to the Chairman/ Managing Director, Mobil Producing Nigeria Unlimited, Mr. Richard Laing as well as the immediate past Chairman of Seplat Energy, Dr. ABC Orjiako.
Komolafe in the letter stressed that regardless of the mode of the transaction, Mobil Oil still remains to all intents and purposes, the assignor of the asset under the Nigerian law.
“We also note that MPNU failed to follow the procedure for assignments laid down in the Guidelines by not providing the requisite notices to the Commission at all relevant stages of the transaction. Even if the transaction has been between Seplat Energy Offshore Limited and the MPNU shareholders, responsibility to ensure compliance with Nigerian laws, rules and regulations always remain that of MPNU, the entity that was awarded the assets.
“We regret to inform you that His Excellency, the Minister of Petroleum Resources has declined his consent to the transaction.
“Nothing in this letter shall be deemed to be a waiver, on the part of the Commission, of any rights under the Guidelines, any law, rule or regulation, and the Commission reserves all its rights in respect of the subject matter. Please accept the assurances of my highest esteem,” the Commission’s boss stated in the letter addressed to Laing, with reference number: NUPRC/LD/1189/01, titled: “Re: Potential Sale and Purchase of the Equity (Shares) of Mobil Producing Nigeria Unlimited.”
He also made reference to the multinational oil company’s letter dated March 30, 2022 with Ref: MPN-PGA-NUP-CCE-0322-0027 on the above subject matter.
Komolafe highlighted contents of the letter MPNU wrote then to the NUPRC on the proposed acquisition, and in particular, the section that stated that the transaction was between parties who were not privy to the Joint Operating Agreement (JOA) between the Nigerian National Petroleum Company (NNPC) and the MPNU dated June 28, 1990, and that does not trigger any relevant rights or obligations under the JOA for either NNPC or MPNU. Also, the MPNU had stated in the letter that the sale of shares by shareholders of MPNU would have no bearing on the consent or preferential right and option requirements of the JOA in favour of NNPC and that the NNPC does not have preferential rights in respect to the transaction.
In addition, the regulator made reference to another aspect of the letter Mobil wrote to it on the matter that, the MPNU shareholders would be proceeding with their efforts to satisfy the conditions required for the approval of the proposed transaction, and the procurement of the consent of the Minister of Petroleum Resources.
Furthermore, the Commission pointed out that: “You may also be aware that the Commission is in receipt of a letter of 10th March 2022, written by Seplat Energy to the Minister of State for Petroleum Resources, requesting the consent of the Minister of Petroleum Resources to the transaction. This letter was received by the Commission on March 30, 2022.
“Please be advised that even if the transaction in question were between parties who are not privy to the JOA, MPNU remains the leaseholder of the assets subject to the transaction and the focal point of contact with the federal government of Nigeria on any matter or dealings with the assets.
“In this regard, you may wish to note that paragraph 3.1 of the Guidelines and Procedures for Obtaining Minister’s Consent to the Assignment of Interest in Oil and Gas Assets 2021 provides, in line with extant Nigerian law, that ‘an Assignment involves the transfer of an OPL, OML, MF or OGPL or an interest, power or right therein by any company or person with equity, participating, contractual or working interest in the said OPL, OML, MF or OGPL, through merger, acquisition, take-over, divestment or any such transaction that may alter the ownership, equity, rights or interest of the assigning company in question, not minding the nature of upstream arrangement that the assigning company may be involved in, including but not limited to Joint Venture (JV), Production Sharing Contract (PSC), Production Sharing Agreement (PSA), Service Contract (SC), Sole Risk (SR) or Marginal Fields operation.
“Also note that overriding National interest will always be the compass of the law. Paragraph 3.1.1 of the guidelines also expressly restates that assignment shall include, but not be limited to: ‘assignment by way of exchange or transfer of shares: This shall entail the acquisition of part or all of the shares of a company which holds an OPL, OML, MF or OGPL in Nigeria.”
According to the regulatory commission, until an assignment was completed, including the granting of Ministerial consent to such assignment, the leaseholder remains the registered owner of the asset and the only one with the locus to interact with the government in respect of the asset.
Also, in the letter addressed to Orjiako, the regulatory commission also highlighted relevant sections in the Guidelines and Procedures for Obtaining Minister’s Consent to the Assignment of Interest in Oil and Gas Assets 2021.
“Thus, regardless of the mode of the transaction, MPNU, remains, to all intents and purposes, the assignor under Nigerian law and is the proper person to bring an application for Ministerial consent to the transaction, not Seplat. Consequently, you are hereby requested to revert to MPNU, the assignor, to receive updates on your application,” it stated.
