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Stakeholders condemn rejection of Seplat/Exxon Mobil deal



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Federal Government decision to block the asset transfer deal between Seplat Energy and ExxonMobil Unlimited, has provoked negative reactions from industry stakeholders, who frown at such undisguised display of discrimination against the Nigeria company.
The transaction had received mixed reaction from the government once it was announced earlier in the year, and informed sources hinted that it would have be surprising if the deal was allowed to pass because it took government by surprise.

Last week, it was announced by government through its regulators that the assets acquisition sale has been rejected by government, citing national interest and procedural failures in the application by Seplat. Concerning overriding national interest, Nigeria UPstream Regulatory Commission, NUPRC, acknowledged Mobil Oil still remains to all intents and purposes, the assignor of the asset under the Nigerian law.

With the announcement, Seplat Energy’s share price fell 6% in mid-day trading, following the decline by the Federal Government to approve the $1.8 billion acquisition of the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation.

As of the close of business on Thursday, the company’s share price fell 6.16% making it one of the major losers for the week. The share price was also down 4.44% on the London Stock Exchange. According to data, the company’s recorded a volume of 336, 592 closing at a share price of N1,220. Seplat’s previous close was N1,300.10. The decline has wiped about N23.6 billion off its market value which is now N360.9 billion.

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.
According to Komolafe, ”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.”

He added, “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.

Also, in the letter addressed to Orjiako, the regulatory commission also highlighted relevant sections in the Guidelines and Procedures for Obtaining Minister’s Consent to the Assignment of Interest in Oil and Gas Assets 2021.

“Thus, regardless of the mode of the transaction, MPNU, remains, to all intents and purposes, the assignor under Nigerian law and is the proper person to bring an application for Ministerial…

It would be recalled that outrage and disbelieve had greeted outburst by the Group Managing Director of NNPC Ltd. Mr. Mele Kyari, when he declared in February, 2022, that the acquisition of ExxonMobil assets by Seplatmay be stopped without fulfilling some regulatory conditions.

His view reflected the unease in government over the increasing rate of divestment by International Oil Companies, IOCs, from both onshore and offshore operations in Nigeria in recent time.

This followed the announcement by both Seplat and ExxonMobil of the purchase agreement which transferred its onshore and offshore assets to Seplat. It was a major step by the Nigerian company to consolidate its position in the industry.

Speaking at the Nigeria International Energy summit in Abuja, Kyari rejected the sale by insisting the transaction cannot go through unless certain unclear conditions were met. Informed sources hinted that this was a transaction between two corporate entities that followed stated regulations and any other stipulations outside the legally binding requirements can only be politically motivated.

Experts and other stakeholders questioned the present stand of government on this transaction when previous ones were permitted without objections. They question the motive behind the position of government through the NNPC, stressing that it was politically motivated to stop an Igbo man from owning such important national assets in the oil industry. Seplat is promoted by Dr. ABC Orjiako, an Igbo physician turned businessman.

Government concern may have arisen from the critical role oil plays in the economy and government revenue in view of the growing ethnic separatist agitation by the Igbo led by IPOB, whose leader, Mazi Nnamdi KANU, is standing trial for treason and terrorism charges. But they argued that government position on the acquisition by Seplat negates its policy of investment drive in the sector and the ease of doing business.

There was noticeable double-speak and after-thought in Kyari’s position after he had earlier admitted that the deal was normal because of extant issues, only to reverse himself later by opposing it. The volte face was not lost on many people who saw inconsistency in his statements.


Mele Kyari, said International Oil Companies (IOCs) divesting from Nigeria’s upstream sector must address issues of abandonment and decommissioning of oil assets.

Decommissioning, which is the general term for returning an oil production site to its pre-lease condition at the end of the useful life of the oil asset, can be a costly exercise for the companies involved. Many fields abandoned in Nigeria are not decommissioned largely because the local companies who acquire them don’t have the required funds to do so.

He had said that to sustain a prosperous business environment for Nigeria, the national oil company would pay particular attention to abandonment and relinquishment costs, severance of operator staff, third-party contract liabilities, and competency of the buyer of any divested asset.

While the NNPC has not hidden its intention to snap up the assets, it has struggled to raise financing. In January, the NNPC and the African Export-Import Bank agreed to raise $5 billion as corporate finance to fund major investments in Nigeria’s upstream sector.

Ayodele Oni, energy lawyer and partner at Bloomfield Law Practice, said there are pre-emption rights for NNPC’s joint operating agreements.

“These pre-emption rights usually give the NNPC the right to match the best (financial) terms for any such acquisition and acquire the said asset, according to him.

“Usually, one condition to closing such deals is a document evincing the waiver of pre-emption rights by the NNPC and other joint venture partners, if any. Thus, generally speaking, and depending on the stage they are at and whether a waiver has even been obtained from NNPC, it may be able to scuttle same,” Oni said.

There has been a significant change in the last few months on oil asset ownerships in the country, especially in the upstream sector. For over 60 years Shell, Exxon Mobil, Chevron, Agip, Texaco and Total, were all synonymous with the Nigeria oil industry but as at Friday, 25 February, 2022, the number is now three.
Exxon Mobil Corporation (ExxonMobil) is the latest major oil corporation to exit Nigeria, announcing that it has sold its stake in Mobil Producing Nigeria Unlimited to Seplat, a Nigerian oil business, for $1.3 billion, the Guardian newspaper reports.

In 2021, UK-based Royal Dutch Shell quit Nigeria after completing the sale of its assets to TNOG Oil and Gas Ltd while Texaco sold off its assets to Chevron in 2000.

Chevron is also looking for buyers for its OMLs 86 and 88, which the firm has been trying to get rid off since 2016, but couldn’t find a buyer. The assets are still up for sale after the oil major sold it’s OMLs 83 and 85 in 2015. While Total Nigeria is battling with media suggestions that there are plans to quit Nigeria.

Nigerian businessman, Tony Elumelu is the man behind, TNOG Oil and Gas Ltd who bought shell assets in 2021. The other is Sayyu I. Dantata the half-brother of Africa’s richest person, Aliko Dangote through his company MRS Holdings, who bought Chevron’s upstream business, OMLs 83 and 85 in 2015.

“Companies are divesting. They are leaving our country. That is the best way to put it,” Mr. Kyari had admitted.

“They are not leaving because opportunities are not here but because companies are shifting their portfolios where they can add value and not just that, but where they can also add to the journey towards carbon net-zero commitment.”
He said the country must have “the most friendly fuel” in place in the next five to 10 years, while building its ability to use renewables.

“We understand the necessity for divestment. We do know that there are issues. We understand that this must take place but also that it must be done in such a way that we can deal with issues around decommissioning and also make sure that whatever arrangement that is put in place ensures that we are also aligned along the energy transition journey that we are going to,” Kyari said.

Also, former minister of state for petroleum and Group GMD of NNPC, Dr. Ibe Kachikwu, faulted Kyari on the reason companies are divesting. He insisted that it has to do with the business environment, rather than policy transition from oil to green energy.He said there is a lot to worry about, and a lot of urgency to be given to the tasks needed to save this sector.

“If you followed me in my twilight years in office, you will remember my famous ‘URGENCY OF NOW’ clarion call and the speed with which I raced to seek solutions for this sector as though time was running out!
“Time is truly running out. I know that those at the helm of affairs in this sector, both public and private, are doing a lot to stabilise it.


“Nigeria needs to go back to the drawing board to figure out the right approach to this sector. It cannot be business as usual anymore and some of the new bold decisions being taken reflect this. However, the time has come to be Bullish, or the sector will collapse”.

A financial consultant and economist, who craved anonymity, queried government objectivity in taking the decision, insisting that anything in this country that involves the Igbo is viewed with suspicion and ambivalence.

“Truly, there is obviously some element of politics in this matter, because how did the other companies get approval. Even when others make mistakes, their people find a way to cover for them and get the things approved.

“But for the Igbo any loophole is exploited to deny them. There an element of discrimination in the action, because there is no reason to reject it totally. If there are procedural errors, they could be corrected. What national interest exists in this transaction that was not in the previous deals involving other people. It is sad”, he said.

Just last week, 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.

Sylva said 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.


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