Nigeria`s indigenous oil company, Seplat Energy Plc has received the approval of President Muhammadu Buhari for the acquisition of Nigerian Assets and the shares of US subsidiaries of ExxonMobil Corporation, thereby overcoming the initial resistance from the NNPC.

Basic Facts

• ExxonMobil had in February of 2021 agreed to sell the entire share capital of Mobil Producing Nigeria Unlimited (MPNU) to Seplat Energy Plc at the cost of $1.3 billion.
• This agreement was blocked by the Nigerian National Petroleum Corporation (NNPC), through a court injunction in a suit brought against ExxonMobil
• This presidential approval therefore, runs contrary to the position of the Nigerian National Petroleum Corporation (NNPC), which was said to have opposed the deal because it wanted the right of first refusal as a partner to ExxonMobil

What We Know

Clariform have gathered that the deal between Seplat and ExxonMobil covered Nigerian assets like oil mining lease 68, oil mining lease 69, oil mining lease 70 and oil prospecting licence.

Seplat by the deal was in effect acquiring the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Mobil Development Nigeria Inc, and Mobil Exploration Nigeria Inc, both registered in Delaware, USA.

The agreement between the two parties was opposed by the state-owned oil company (NNPC), which sued ExxonMobil to stop it from selling its assets in Nigeria.

Seplat was not a party in the suit but was directly affected, when the deal was earlier blocked through a court order of injunction arising from the suit.

The deal suffered further setback when the federal government also earlier refused to approve the deal in May, this year, claiming that the decision was reached on the ground of “overriding national interest”.

Notwithstanding these oppositions, Seplat stock to what it saw as the legality of its deal with ExxonMobil, insisting on seeing through the acquisition.

Catch-up

In an official statement by Seplat following the court injunction restraining the deal, the company secretary at Seplat – Edith Onwuchekwa, confirmed that an Abuja high court had granted the NNPC an “order of interim injunction” restraining ExxonMobil “from completing any divestment” of the assets.

Speaking further she said:

“Seplat Energy PLC recently became aware that, on 5 July 2022, the Nigerian National Petroleum Company Limited (“NNPC”) commenced an action at the State High Court of the Federal Capital Territory in Abuja, Nigeria (“State High Court”) in relation to the acquisition of the entire shares of Mobil Producing Nigeria Unlimited (“MPNU”),” the statement reads.

“MPNU, its shareholders (Mobil Development Nigeria, Inc. and Mobil Exploration Nigeria, Inc.), and the Nigerian Upstream Petroleum Regulatory Commission are named as defendants in the suit.

“NNPC has requested the State High Court to declare that a dispute has occurred between itself and MPNU in relation to the interpretation of pre-emption rights under their Joint Operating Agreement (“JOA”) and order NNPC and MPNU to arbitration as required by the JOA.

“On 6 July 2022, the State High Court made an ex parte order of interim injunction restraining the Defendants from completing any divestment in MPNU, including the Share Sale and Purchase Agreement signed with Seplat Energy Offshore Limited (the “SPA”).”

Eventual Approval

About 3 months after the initial denial of consent by the federal government, President Buhari has now given the nod for the deal to be carried forward by Seplat and ExxonMobil.

In a statement on Monday, the presidential spokesperson, Femi Adesina, disclosed President Buhari made a decision to reverse the government earlier position and give approval considering the generous benefits from the deal in the light of Nigeria`s oil sector and the entire economy.

Notable Quotes

The statement reads in part:

“In his capacity as minister of petroleum resources, and in consonance with the country’s drive for foreign direct investment in the energy sector, President Muhammadu Buhari has consented to the acquisition of Exxon Mobil shares in the United States of America by Seplat Energy Offshore Limited,” the statement reads.

“Exxon Mobil had entered into a landmark Sale and Purchase Agreement with Seplat Energy to acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Mobil Development Nigeria Inc, and Mobil Exploration Nigeria Inc, both registered in Delaware, USA.

“Considering the extensive benefits of the transaction to the Nigerian Energy sector and the larger economy, President Buhari has given Ministerial Consent to the deal.”

“Exxon Mobil/Seplat are expected to carry out operatorship of all the oil mining licenses in the related shallow water assets towards production optimization to support Nigeria’s OPEC quota in the short term as well as ensure accelerated development and monetization of the gas resources in the assets for the Nigerian economy,” it added.

“President Buhari also directed that all environmental and abandonment liabilities be adequately mitigated by Exxon Mobil and Seplat.”

Takeaway

The deal that was later approved by President Buhari is the same deal that was earlier refused consent and blocked by the NNPC Ltd through an Abuja High court injunction in July.

Clariform could not confirm as at time of reporting what actually led to the reversal of the earlier refusal by the government.

The federal government had as at May claimed that the refusal of consent was based on “overriding national interest”.

Yet, 3 months after, the same federal government now spoke so glowingly of the deal, saying – “Considering the extensive benefits of the transaction to the Nigerian Energy sector and the larger economy, President Buhari has given Ministerial Consent to the deal.”