The Federal Government has refused to give its consent to the proposed acquisition of oil and gas assets belonging to Mobil Oil Producing Nigeria Unlimited (MPNU) by Seplat Energy.
The government in its formal response attributed its decision to reject the deal which was first announced almost 3 months ago, to overriding national interest, among other reasons.
According to Thisday, this was made known by the Chief Executive Officer of Nigerian Upstream Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, in 2 separate letters dated May 13, 2022, 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 had in the letter maintained that regardless of the mode of the transaction, Mobil Oil still remains to all intents and purposes, the assignor of the asset under Nigerian law.
This is not the first time reports have surfaced about the rejection of the transaction by a government entity.
What the Chief Executive of NUPRC is saying
Komolafe stated, “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.”
The transaction involves parties not privy to JOA
Komolafe in his letter 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 the 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.
Overriding national interest to guide any approval
Going further, 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.
“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.”
- Recall that on February 25, Seplat Energy Plc announced an agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Delaware for $1.28 billion.
- The transaction entails the acquisition of ExxonMobil Nigeria’s entire offshore shallow water business. According to the notice, ExxonMobil Nigeria’s shallow water business is an established, high-quality operation with a highly skilled local operating team and a track record of safe operations, producing 95 kboepd in 2020 (92% liquids).
- But the deal was subject to Ministerial Consent and other required regulatory approvals.
- However, on March 4, Nairametrics had reported that the NNPC had set out to meet the management of Exxon Mobil Corporation on March 17, 2022, over an agreement it had with Seplat Energy Plc to acquire the entire share capital of Mobil Producing Nigeria Unlimited, Delaware for $1.28 billion.
- According to the source, the state-owned oil giant has opted to exercise its Right of First Refusal (RFR) on the sale of the assets. The RFR is reportedly contained in the Joint Operating Agreement (JOA) of the Joint Venture (JV), which represents NNPC’s position on the planned sale of the shares to Seplat Energy Plc.
- Seplat denied at the time that there was a rejection with the company CFO, Emeka Onwuka stating that “The company wishes to clarify that the Special Purchase Agreement (SPA), earlier announced on February 25, deals with the acquisition of the entire share capital of MPNU’s shareholders. Mobil Development Nigeria Inc. and Mobil Exploration Nigeria Inc., being entities of Exxon Mobil Corporation registered in Delaware (“ExxonMobil”). MPNU, is not a party to the SPA and continues to hold its interests, rights and obligations under the NNPC/MPNU JOA. There are also some reports that the SPA between ExxonMobil and Seplat Energy has been terminated. Seplat Energy confirms that no event of termination has occurred, and the SPA remains valid and subsisting.”