Following reports on the failed assets acquisition deal between Seplat Energy and ExxonMobil, investigation has shown that the state oil company, the Nigerian National Petroleum Corporation, has made a mouth-watering offer to acquire the assets, sources close to the deal disclosed to The PUNCH.

ExxonMobil and Seplat Energy had recently announced a $1.6bn sales agreement deal that would see Seplat purchase ExxonMobil’s complete shares in the state-owned oil firm.

However, just when all hopes were high for the completion of the deal, a letter dated May 16, 2022, by the Nigerian Upstream Petroleum Regulatory Commission to ExxonMobil, stated that the deal could no longer hold because the NNPC had exercised its right of pre-emption first refusal on the assets as part of a new era to focus solely on building the long-term profitability of the NNPC Ltd.

Right of pre-emption is a legal right to parties in a joint venture to be the first to be considered for any planned sale or takeover of assets in the JVs if either party chooses to trade them off.

According to findings, the NNPC objected to the sale of ExxonMobil’s equity to Seplat, and insisted on exercising its first right of refusal, after which the Corporation made an offer above $1.6bn to ExxonMobil.

The state-owned oil firm is the major shareholder in the Joint Ventures (JV) with ExxonMobil.

The NNPC will officially debut in July, and The PUNCH gathered that its bid to acquire ExxonMobil’s assets is part of the Corporation’s expansion plan.

Seplat Energy had made the winning bid, having staked $1.583bn for the deals to acquire the entire share capital of Mobil Producing Nigeria Unlimited plus contingent consideration, with the asset transfer waiting for the minister’s assent.

In a letter sighted by The PUNCH in March, signed by Group Managing Director, Mele Kyari, and addressed to ExxonMobil, the NNPC reiterated its resolve to take over ExxonMobil’s share of the assets.

“We are aware that you reached an agreement to divest from onshore and shallow waters JVs,” the NNPC said in the letter, stating “clearly we are interested.”

The NNPC also reiterated, in the letter, that it had already transformed from being a corporation to being a profit-driven company and that it now had the capacity to buy over the share of ExxonMobil in the Joint Ventures.

This means that the state-owned oil firm must have, based on its exercise of right of first refusal, paid above the $1.583bn mark offered by Seplat.

Sources disclosed that the Corporation must have parted with as much as $2 billion for the assets.

Recall that the NNPC recently announced a funding agreement with AFREXIM for up to $5 billion to grow its investment in new and existing upstream assets.

Both Seplat and ExxonMobil declined to comment on the development.

The PUNCH had contacted an official of the External Relations Department of Seplat, Mr. Stanley Opara, who asked that an official email should be sent to him and the company’s Director, External Affairs & Sustainability Officer, Chioma Nwachuku.

Our correspondent did send the email. However, no response was received as of press time. Also, the spokesperson for ExxonMobil, Oge Udeagha, who requested an official email, did not also respond as of the time of filing this report.

The spokesperson for NNPC, Garba Deen Muhammed’s, phone was switched off when our correspondent called his line to get a response.

Experts react

Energy law expert, Bloomfield, Ayodele Oni, said the failed agreement could cause the likes of TotalEnergies looking to also divest some of its assets to be discouraged from going into negotiations.

“In terms of impact, it can be a bit concerning because it then means that anyone who wants to do a similar deal may be reluctant to have gone through the emotions of the process, especially because it is the right of first refusal. It means that NNPC always has that up front regardless of how you structure your deal.

“As it is now, part of the reason for doing it as a shared deal is that things like this do not happen. Again, the issue of NNPC exercising such a right is scary. For example, Total is looking to also divest some assets, and there will be concerns generally, meaning that there won’t be enough people bidding for those assets.”

According to him, the NNPC is exercising its right of first refusal which “could be controversial because it is a shared deal.”

He however said it would be a nice takeover if NNPC could adequately manage the assets without passing them on to its friends and cronies.

Group Chairman/CEO at International Energy Services Limited, Dr Diran Fawibe, said the government would have given consent as the deal had already been reported far and wide.

“Since the negotiation has been allowed to go to the stage where the whole world has been alerted, the government should have given approval, lest the cancellation will give the wrong signal to the international community.”

He also said the crumbling of the agreement could discourage other investors, particularly gas investors, from coming into the country.

He said, “Currently, Shell is negotiating the divestment of its onshore and shallow water assets, just as Total is equally trying to do so. Now, this will make potential investors panic about whether it will be in their overall interest. Except the issue offends the national interest in the core, I believe the government should have allowed the negotiation and agreement to stand.

“We will now be watching what will happen next. It was a competitive bidding but nothing was reported about the bidding, so, just waking up to hear that ministerial consent had been withdrawn is not very good for our national image in terms of sending a wrong signal to the international bodies who may want to invest in future divestments, or in the marginal fields, because government would still use the NNPC or the Nigerian upstream commission to invite interests to bid for assets, and particularly gas.”

He added. “Nigeria is reputed to have over 200 trillion cubic feet of gas reserves, and we expect that there must be a gas bidding exercise in the future. If there’s uncertainty that it could be hard to obtain government consent, even though the government has passed the PIB into Act, we should consider the implication of how it will be received in the international community, particularly the investors.”

The Punch


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