ExxonMobil Assets to Seplat: Confusion over Sylva’s commendation as FG rejects deal
Less than one week after Chief Timipre Sylva, Minister of State, Petroleum Resources lauded Seplat Energy Plc on its recent acquisition of the entire share capital of Mobil Producing Nigeria Unlimited (MPNU) from ExxonMobil Corporation, Delaware, United States of America, the same Federal Government has declined its consent to the acquisition of oil and gas assets belonging to Mobil Oil Producing Nigeria Unlimited (MPNU) by the indigenous oil giant.
Business Hilights recalls that Sylva had said that such investments, which were underpinned by responsible policies that could ensure achievement of net-zero carbon emission, were commendable and appreciated by the government and good people of Nigeria.
The minister gave the commendation at the official launch of `Seplat Energy Tree 4 Life Initiative’ on Tuesday in Abuja.
The tree planting launch was performed by Sylva alongside Seplat’s Chief Executive Officer, Mr Roger Brown, Senator (Mrs) Margrey Okadigbo, Nigerian National Petroleum Company (NNPC) Board Chairman and Dr ABC Orjiako, Chairman, Seplat, among others. He noted that the Tree for Life Initiative programme was aimed at reducing carbon dioxide from the atmosphere.
However, in an emerging twist, the government among others, cited overriding national interest as one of the reasons for rejecting the deal.
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. Both letters obtained by THISDAY yesterday, were dated May 13, 2022.
Seplat Energy had in February this year, announced its acquisition of oil and gas assets belonging to MPNU. But the deal was subject to Ministerial Consent and other required regulatory approvals. However, few weeks after, it was reported that the Nigerian National Petroleum Company (NNPC) Limited had opted to exercise its Right of First Refusal (RFR) on the sale of the assets, which then put a hold on the transaction.
But 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.’
