Business
Seplat/ExxonMobil assets purchase crisis deepens
BY EMEKA EJERE
There is no resolution in sight to the disputes emanating from the proposed acquisition of the entire share capital of Mobil Producing Nigeria Unlimited (MPNU) from Exxon Mobil Corporation by Seplat Energy Offshore Limited.
Instead, conflicting positions by the day of major actors in the saga cannot but suggest to observers in the oil and gas sector and beyond that the worst of the raging crisis has not been seen, even as they wonder who is charge of the process following conflicting positions between the Presidency and the regulator.
On Thursday, Seplat Energy said it had not received any official notification from the federal government reversing its deal with Exxon Mobil. The company also said it was seeking clarification from relevant authorities regarding the claims that President Muhammadu Buhari, who doubles as Minister of Petroleum Resources, had withdrawn his ministerial approval for the acquisition.
Buhari had on Wednesday, reversed his authorisation of the acquisition of the entire share capital of MPNU by Seplat, in a move that was widely seen as putting the Presidency on the side of the Nigerian National Petroleum Company Limited (NNPCL) which had earlier declined the $1.28bn transaction.
A statement by the Special Adviser to the President on Media and Publicity, Femi Adesina, had announced on Monday (Aug 8) that Buhari consented to the acquisition of Exxon Mobil shares by Seplat Energy as the Petroleum minister by overruling the Upstream Petroleum Regulatory Commission, UPRC.
According to the Presidency, Buhari authorised the move in his capacity as Minister of Petroleum Resources as a way to attract Foreign Direct Investment to the country.
This was, however, contested by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), with its Chief Executive, Gbenga Komolafe, saying in a statement that the regulator did not and would not endorse the transaction.
According to the statement, the Commission, in line with the provisions of the Petroleum Industry Act 2021 is the sole regulator in dealing with such matters in the Nigerian upstream sector.
NUPRC said, “As it were, the issue at stake is purely a regulatory matter and the Commission had earlier communicated the decline of Ministerial assent to ExxonMobil in this regard.
“As such the Commission further affirms that the status quo remains. The Commission is committed to ensuring predictable and conducive regulatory environment at all times in the Nigerian upstream sector.”
However, in what many saw as another policy summersault, Senior Special Assistant to the President on Media and Publicity, Garba Shehu, on Wednesday, stated that Buhari had reversed the decision and that the misunderstanding was because the “agencies involved in (the) decision had not coordinated well among themselves.”
The PIA provisions
The PIA 2021 which is the governing regulatory instrument in the petroleum industry empowers the Minister to authorize or consent to asset acquisitions based on advisory from the regulator. However, the ExxonMobil and Seplat assets transfer deal is the first test for the PIA enacted barely one year ago.
Upon its implementation, the substantive minister Buhari transferred some rights to the Minister of State Petroleum Resources, Timipre Sylva, who chairs the steering committee on the PIA implementation. However, Sylva has not been involved ‘publicly’ in this issue while he had continued to execute other roles for the Minister.
Specifically, Section 95(2) of the PIA 2021, state: “The consent of the Minister shall be granted upon the recommendation of the Commission.
More so, ExxonMobil (not Seplat) is mandated by the Act in Section 95(1) thus, “A holder of a petroleum prospecting licence or petroleum mining lease shall not assign, novate or transfer his licence or lease or any right, power or interest, or a shareholder of an incorporated joint venture shall not sell or transfer its share without prior written consent of the Minister.”
In the latest statement by NUPRC, the regulator said it had conveyed its decline of assent to ExxonMobil earlier and stood by that, implying that its advisory to the Minister would be to decline assent.
Legal barriers
Seplat Energy had, last February announced an agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Delaware for $1.28bn.
The transaction involved the acquisition of ExxonMobil Nigeria’s entire offshore shallow water asset; an established, high-quality operation with a highly skilled local operating team and a track record of safe operations.
The NNPCL, however, has a pre-emptive right over the asset and had last month won a court decision temporarily blocking ExxonMobil from selling assets in Nigeria to Seplat Energy.
A Judge in Abuja had granted NNPCL an “order of interim injunction” on July 6, 2022, barring Exxon Mobil “from completing any divestment” in a unit that ultimately operates four licenses in Nigeria. That is not the only legal impediment to the controversial deal.
Last week, the Akwa Ibom State government warned Seplat Energy against move to acquire ExxonMobil Nigeria stakes.
The warning contained in a statement by the state government signed by the state Attorney-General and Commissioner of Justice, Uko Essien Udom (SAN) and made available to newsmen in Uyo, indicated that there is a subsisting restraining orders of injunction by the High Court of the state.
The state government noted that ExxonMobil, Seplat Energy, NNPC Ltd and the Federal Government of Nigeria, all have actual knowledge of the suit and the action of the FG is not only contemptuous but infringes on the judicial process of the Akwa Ibom State High Court
The statement had read in part: “Our attention has been drawn to a publication by Femi Adesina, Special Adviser to the President (Media and Publicity), to the effect that President Muhammadu Buhari, in his capacity as Minister of Petroleum Resources has consented to the acquisition of shallow water assets of Mobil Producing Nigeria Unlimited by Seplat Energy.
“This is to inform the general public that this proposed transaction is subject to restraining orders of injunction of the High Court of Akwa Ibom State, sitting in Uyo in Suits No. HEK/56/2018, Attorney General of Akwa Ibom State V. Mobil Producing Nigeria Unlimited and HU/209/2020, Mobil Producing Nigeria Unlimited V. Governor of OF Akwa Ibom State & three others…”
It is likely that the reversal by the President may have calmed nerves within Akwa Ibom State Government, But Seplat does nor seem to be giving up on the transaction. In a statement by Emeka Onwuka, Chief Financial Officer, Seplat Energy, the company said:
“Seplat Energy has become aware of a news report that Ministerial Approval of the Company’s proposed acquisition of the entire share capital of Mobil Producing Nigeria Unlimited (“MPNU”) has been withdrawn.
“Seplat Energy has received no official notification of such a decision and is seeking clarification from the relevant authorities. We will continue to work with all parties to achieve a successful outcome to the proposed acquisition and will provide an update in due course.”
Experts react
A Lagos-based legal practitioner and public affairs commentator, Barrister Imma Okochua, said there are still issues in implementing the PIA 2021.
“To be honest, I don’t think that is what is playing out here. I think what we are seeing is that the Nigerian factor may not have been exhaustively pursued through behind-the-scenes compromises,” he said.
“The point for me regarding this issue is, I read the past PIA, but not the present one and I know that the president has final say in some of these things like awarding oil blocks.
”If the current law retains that provision, then the regulatory agency can only complain; they can only express their view as they are doing.
“But if the president does not have that power under the recently passed PIA, if they have removed it from the president and given it to an institution, well then one would be surprised that the president is approving,”
Calling for sanity in the sector which he said had been compromised for long, Okochua said, “Things are so bad in Nigeria that I cannot use an instance like this, which is still under resolution, to reach any conclusion.
“No matter the people involved, our institutions have been so badly compromised, politicized that it is only when they continue to stand their ground and maybe eventually prevail against the presidency that one may begin to say that maybe we are now having the institutions that good people have been dreaming of that can stand up to political powers.”
In his view, a lecturer at the University of Nigeria, Nsukka, David Akwu, noted that the said regulatory intervention, which differed from the position of the Minister of Petroleum Resources, President Muhammadu Buhari is not enough to suggest policy summersault.
According to him, it could be potentially an enabler and incentive to foreign investors as they would feel confident that the regulatory agency would do the right thing even in the face of political pressure and interference.
“An independent regulator for the petroleum industry is the biggest incentive right now to attract FDI,” he said.
Analysts believe ExxonMobil’s move to exit Africa’s largest crude producer reflects the growing tendency among international oil companies to discontinue their stakes in onshore operations in the country and plough in their investment elsewhere.
It is believed that oil drillers are finding operations that are close to host communities increasingly worrisome and feel holding on to offshore fields is the way to go.
TotalEnergies SE in April, announced plans to divest its 10 per cent minority stake in a joint venture with a company holding twenty onshore and shallow water licenses in Nigeria. Shell, owner of the permits, has been approached by four indigenous companies including Seplat for a 30 per cent stake in the firm.