Connect with us

Energy

ExxonMobil-Seplat Deal: When a Regulator Misinterprets the Law

Article by Josiah Adewale

Published

on

ExxonMobil-Seplat

To say that the mixed news coming from the federal government of Nigeria over President Muhammadu Buhari’s consent to the acquisition of the entire ExxonMobil, Delaware, USA’s shares in Mobil Producing Nigeria Unlimited (MPNU) by Seplat Energy Offshores Limited, a wholly-owned subsidiary of Seplat Energ​​y Plc., is a serious cause for worry for the global business community is to state obvious.

Nigeria is probably the only country in the world that could allow this game by the Nigerian National Petroleum Corporation Plc. (NNPC) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) over a $1.3 billion transaction, which also includes up to $300 million contingent consideration.

A statement by Special Adviser to the President on Media and Publicity, Mr. Femi Adeshina, said the approval was predicated on the deal’s extensive benefits to the Nigerian energy sector.

It read: “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.

“ExxonMobil had entered into a landmark Sale and Purchase Agreement with Seplat Energy to acquire the entire share capital of Mobil Producing Nigeria Unlimited from ExxonMobil 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.

“The President, in commitment to investment drive in light of the Petroleum Industry Act, granted consent to the Share Sales Agreement, as requested by the parties to the transaction, and directed that the approval be conveyed to all the parties involved.

Seplat, buhari
President Buhari

“ExxonMobil/Seplat are expected to carry out operatorship of all the oil mining licenses in the related shallow water assets towards production optimisation to support Nigeria’s OPEC quota in the short term as well as ensure accelerated development and monetisation of the gas resources in the assets for the Nigerian economy.

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

Misinterpreting the law

Surprisingly, hardly had the President’s ink dried than the NUPRC openly countermand his assent in a bizarre move that has discomfited global business community and set tongues wagging.

In insisting that the earlier veto by the NNPC remained, Buhari’s consent notwithstanding, NUPRC Chief Executive, Gbenga Komolafe, cited provisions of the Petroleum Industry Act (PIA) 2021, which he claomed, conferred on the Commission powers of sole regulator of the upstream subsector.

“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.

“Let me just put it simply, as a Commission, we work strictly in line with the position of the law, and basically we don’t react on the basis of news making the rounds, but we work strictly in line with the law.

“And by virtue of the provisions of the petroleum industry act, under section 95, subsection 10, 14 and 15, the commission’s powers in these regards are clearly stated.

“So, regarding the issue, my clarification will just be an affirmation that the position of the Commission stands in respect of the decline of the assets (sale), without prejudice to any other position.

“So, the position of the Commission as the authority involved in the regulation of the upstream, which had earlier been communicated to Mobil, stands. As far as the commission is concerned, nothing has changed. The status quo remains as far as we are concerned,” he insisted.

But NUPRC referencing to Section 95 of the PIA as guiding ministerial consent is wrong because the PIA does not apply to the MPNU assets, which are OML assets. OMLs are still guided by the Petroleum Act (PA), and the MPNU’s OML assets are yet to be converted to PIA regime and Buhari exercised the powers of the Minister under the PA. Section 303 (1) of the PIA unambiguously provides that the PIA does not apply to unconverted OPLs and OMLs until the OPLs and OMLs come up for renewal.

Even at that, whereas Section 95 (15) of the PIA 2021, which NUPRC gleefully quotes provides that “A holder of a petroleum exploration licence shall not assign, novate or transfer his licence or any right, power or interest without prior written consent of the commission”, Section 95 (8) expressly provides that “Where the consent of the minister is granted in respect of the application for a transfer, the Commission shall promptly record the transfer in the appropriate register.”

So, industry stakeholders are understandably at a loss as to where NUPRC derives its powers to override the Minister’s consent.

Playing NNPC’s script

Obviously NUPRC is acting NNPC’s scripts. It is recalled that the NNPC had in a May 2022 letter to ExxonMobil by its Group Managing Director, Mele Kyari, said the transaction could not be consummated as it wanted to exercise its right of first refusal in the June 28, 1990 Joint Operating Agreement (JOA) with ExxonMobil.

To make good its threat, the NNPC in July dragged ExxonMobil to a Federal high Court in Abuja, asking the Court to order that a dispute had occurred between the parties over pre-emption rights, or to order them to take the matter to arbitration, quoting a statement from Seplat. It obtained an order of interim injunction baring ExxonMobil “from completing any divestment”.

However, a cursory look at the JOA in question shows that right of first refusal applied only to divestment of Participating Interest, not in a case where a company wants to sale its shares to a third party.

Article 19.4 of the JOA provides: “Subject to sub-clauses 19.1 and 19.2, if any Party has received an offer from a third Party, which it desires to accept, for the assignment or transfer of its participating hereunder (the “Transferring Party”), it shall give the other Party prior right and option in writing to purchase such Participating Interest as provided in sub-clauses 19. 4.1 to 19 .4.2”.

Sub-clause 19. 4.1 states: “The Transferring Party shall first give notices to the other Party, specifying therein the name and address of the aforementioned third Party and the terms and conditions (including monetary and other consideration) of the proposed assignment and transfer”. 

Also, sub-clause 19 .4.2 provides: “Upon receipt of the notice referred to in Sub-clause 19. 2.1, the other Party may within thirty (30) days thereafter, request in writing the assignment and transfer of such Participating Interests to it, in which event the assignment or transfer shall be made to it on the same or equivalent terms”.

However, the JOA, in Article 1 (24), defines Participating Interest as “the undivided percentage interest from time to time held by the parties in the concession (s), the joint property and rights and obligations under this agreement…” 

The question is: did NUPRC or NNPC make any efforts to ascertain from the Presidency the reasons Buhari overruled them on the matter? This becomes pertinent as findings show that the Attorney General of the Federal and the Legal Department of the Ministry of Petroleum Resources (NUPRC’s and NNPC’s supervising ministry) were of the view that the transaction followed the law and consequently advised the President to consent to the deal, as manifestly, MPNU’s Participating Interest in the respective OMLs and the JOA were not offered for sale.

The deal was for the acquisition of shares owned by third parties that are shareholders in MPNU.

It is either the NNPC and NUPRC do not understand the law or they are being mischievous with the law, for It is a given in law that the shareholders of a company are distinct from the company, just as the company is a distinct or separate person in the eyes of the law?

Precedents, implications to Nigeria


Meanwhile, precedence and propriety do not support the NNPC and NUPRC’s position and actions. They are also worried about its grave implications to Nigeria’s already gloomy investment environment.

On Tuesday, an oil and gas industry analyst and publisher of Africa Oil and Gas Report, Toyin Akinosho, decried the impropriety of NUPRC’s public spat with the Presidency, saying it was needless, spoke of poor organisation, and was definitely sending wrong signals to the investment world.

“ExxonMobil simply wants to leave the shallow waters; and other companies have left. So, there have been precedents in terms of how companies have left by handing over their entire shareholding in that particular country.

“ExxonMobil is not selling its segment in the OMLs. They are basically selling MPNU the way Ashaland sold Ashland, the way ConocoPhillips sold its entire shares to Oando, the same way Eland Oil and Gas sold to Seplat and this same government approved it.

“As far as I know, the President Buhari has signed off on ExxonMobil-Seplat transaction, the Attorney General has signed off on it. So, when NUPRC says it is not in compliance with Nigerian laws, I really don’t understand where that is coming from”, he stated.

In May, an Energy Law expert, Bloomfield, Ayodele Oni, warned that truncating the ExxonMobil-Seplat deal could cause the likes of TotalEnergies looking to also divest some of its assets to be discouraged from going into negotiations.

Likewise, the Group Chairman/CEO at International Energy Services Limited, Dr. Diran Fawibe, had warned that “the cancellation will give the wrong signal to the international community”. 

Chasing rats while the house burns

As the controversy rages, Nigerians on social media have wondered why NUPRC and NNPC fiddles when the industry is going south under their watch. Oil theft has worsened to 400,000 barrels per day. Fuel consumption per day has spiked from about 30 million litres per day in 2015 to a bogus 100 million litres amid long cues and sometimes adulterated supplies. Resource-gobbling subsidy has virtually rendered Nigeria bankrupt. NNPC’s has been unable to remit a dime to the Federation Account for months.

Yet both NNPC and NUPRC have been so preoccupied with scuttling a deal they should actually promote and find it difficult to encourage prolific indigenous oil and gas firms to boast Nigeria’s sagging production.

It is high time Mr. President calls them to order and salvage the ExxonMobil-Seplat transaction to save the nation further pains, embarrassments and loss of investors’ confidence.

Adewale, an energy analyst writes from Lagos

GrassRoots.ng is on a critical mission; to objectively and honestly represent the voice of ‘grassrooters’ in International, Federal, State and Local Government fora; heralding the achievements of political and other leaders and investors alike, without discrimination. This daily, digital news publication platform serves as the leading source of up-to-date information on how people and events reflect on the global community. The pragmatic articles reflect on the life of the community people, covering news/current affairs, business, technology, culture and fashion, entertainment, sports, State, National and International issues that directly impact the locals.

Continue Reading

Energy

Climate Change: NNPC Ltd/Total Energies JV Achieves Zero Gas Flare

Published

on

nnpc

In pursuit of meeting the targets of 20% (unconditional) and 47% (conditional) greenhouse gas emission reduction as contained in the Nationally Determined Contribution under the Paris Accord signed by the President Bola Ahmed Tinubu administration, the NNPC Ltd/TotalEnergies Joint Venture has achieved zero routine gas flare in all its assets.

According to a statement signed by Olufemi Soneye, Chief Corporate Communications Officer, NNPC Ltd., this feat was announced on Thursday during an inspection tour of OML 100 in South-eastern Niger Delta, off Port Harcourt, by a joint NNPC Ltd and TotalEnergies Team to ascertain the success of the OML Flare Reduction Project launched in December 2023.  

The NNPC Ltd/TotalEnergies Joint Venture, which is the concession holder of four leases, had hitherto achieved zero routine flaring across OML 99 (2006), OML 102 (2014), and OML 58 (2016), leaving OML 100 as the only lease with routine flaring going on.

The significance of this achievement is that the last routine flare volume of about 12MMscf/d (twelve million standard cubic feet per day) of gas has now been eliminated giving rise to a greenhouse gas emissions reduction of about 341KtCO₂e/yr.

The achievement is an outcome of a programme introduced by the NNPC Ltd to galvanize action towards achieving the zero routine flare by 2030 across its portfolio of assets.

It is also a testament to NNPC Ltd’s prioritization of sustainability anchored on the ‘first R’ of its 5R Strategy (Reduce, Replace, Renew, Re-plant, Repurpose), as it strives to reduce its carbon footprint.

Work is ongoing across all other assets within NNPC Ltd’s Upstream Directorate to ensure that all assets achieve zero routine flaring by 2030 or earlier.

Continue Reading

Energy

NNPC Celebrates 14,000bpd Production from Akpo West Field

By SANDRA ANI

Published

on

nnpc

In line with President Bola Ahmed Tinubu’s directive to the Nigerian National Petroleum Company Limited (NNPC Ltd) to optimise production from the nation’s oil and gas assets, the Company has announced the successful commencement of oil production from the Akpo West Field.

The milestone, which is the result of meticulous planning, strategic collaboration, and unwavering dedication from all stakeholders involved in the project, will add 14,000 barrels per day condensate to the nation’s production. This will be followed up by the production of about 4million cubic meters of gas per day by 2028.

The development of Akpo West which is on Petroleum Mining Lease (PML) 2 (formerly OML 130) leverages the existing Akpo Floating Production Storage and Offloading (FPSO) facility via a subsea tie-back to keep costs low and minimize greenhouse gas emissions.

The milestone was enabled by the strategic leadership of the Group Chief Executive Officer (GCEO), Mr. Mele Kyari, and the Upstream Directorate of the NNPC Ltd whose support played no small role in propelling the operators to actualise the short- and mid-term hydrocarbon production goal of the President Tinubu administration.

Located 135 kilometres offshore, Akpo West is one of the discoveries on PML 2 with proximity to the Akpo main which started up in 2009 and produced 124,000 barrels of oil equivalent per day in 2023.

PML 2 is operated by TotalEnergies with a 24% interest, in partnership with CNOOC (45%), Sapetro (15%), Prime 130 (16%), and the Nigerian National Petroleum Company Ltd as the concessionaire of the Production Sharing Contract (PSC).

Continue Reading

Energy

AVEVA Stresses Critical Role of Digitalization to Fast-track Industrial Decarbonization

By: SANDRA ANI

Published

on

AVEVA Senior Delegation at COP28
AVEVA Senior Delegation at COP28
  • Digital innovation is driving acceleration of decarbonization strategies worldwide in everything from bioplastics to new sources of energy.
  • With a delegation supporting the business agenda of COP28, AVEVA will advocate for the role that industrial digital intelligence can play in speeding up decarbonization and driving circularity

AVEVA, a global leader in industrial software, driving digital transformation and sustainability, will demonstrate at COP28 how leveraging data in a connected industrial economy can accelerate the path towards a sustainable future.

AVEVA is a gold sponsor of the International Chamber of Commerce pavilion within the Blue Zone of the United Nations Conference of the Parties, in Dubai, UAE, with the aspiration of building bridges between developed economies and the global south.

AVEVA’s leaders will highlight how digital solutions can minimize CO² emissions of existing industrial infrastructure while maximizing efficiency across the value chain and delivering measurable cost savings that can be reinvested in clean technologies.

AVEVA’s delegation at COP28 will be led by CEO Caspar Herzberg along with Lisa Wee, Head of Global Sustainability; Harpreet Gulati, Senior Vice President, Head of PI System Business; Evgeny Fedotov, Senior Vice President, EMEA; and Nayef Bou Chaaya, Vice President MEA.

Caspar Herzberg, CEO of AVEVA
Caspar Herzberg, CEO of AVEVA

Caspar Herzberg, CEO of AVEVA, said: “The world must dramatically cut waste. The industrial sector accounts for a quarter of global emissions. Every day, our customers prove that digitalization enables industrial companies to drive measurable carbon reductions, including for traditionally energy-intensive industries. At AVEVA, our ambition is to accelerate low-carbon innovation, and to drive circularity and efficiency across the value chain. We want the software we create to transform how industries are designed and how they operate, to accelerate climate action and reduce inequalities. Forging partnerships with businesses, governments and civil society leaders here at COP is critical to build forward-thinking, collective solutions that accelerate climate action, worldwide.”

Evgeny Fedotov, Senior Vice President, EMEA, at AVEVA, added: “Collaboration is essential to driving efficient global value chains – collective action is also essential to drive decarbonization. This is why we want to be part of the conversation at COP28 to advance necessary and inclusive climate progress by building bridges across international communities.

Evgeny Fedotov, Senior Vice President, EMEA, AVEVA
Evgeny Fedotov, Senior Vice President, EMEA, AVEVA

“As a driving force toward a more sustainable world, COP28 is a milestone moment for the world to take stock of its progress on the Paris Agreement. We are eager to engage with world leaders, governments, and our technology peers, to drive insightful discussions on how together, we can accelerate the transition to a sustainable future.”

Nayef Bou Chaaya, Vice President Middle East and Africa, AVEVA
Nayef Bou Chaaya, Vice President Middle East and Africa, AVEVA

Nayef Bou Chaaya, Vice President MEA at AVEVA, said: “While AVEVA helps industrial customers optimize their existing processes and operations, we drive innovation, opening up new industry frontiers, that leverage emerging green technologies. Our software empowers teams with connected insights so that they can make the best decisions at speed, ensuring the resilience and efficiency that in turn drive sustainable success. The positive impact our solutions bring to customers is our single biggest opportunity to make a difference in the world.”

Lisa Wee, Head of Global Sustainability, AVEVA
Lisa Wee, Head of Global Sustainability, AVEVA

Lisa Wee, Head of Global Sustainability at AVEVA said: “At AVEVA we want to lead by example in the fight against climate change. We have already cut our scope 1 and 2 GHG emissions by 93% and we are actively working to reduce the environmental impacts of our value chain. We have made significant progress in delivering solutions that are low carbon by design and have in-built capabilities to enable industries to decarbonize, drive circularity and adapt to the impacts of global warming.”

“Exchanging insights and forging partnerships with forward-thinking businesses, governments and civil society leaders is critical to finding solutions that increase the scale and scope of climate action across the globe. COP28 is an ideal forum to have these discussions, given the breadth of stakeholders convened alongside key national and international policymakers capable of actively contributing to our collective endeavor for decarbonization.”

Harpreet Gulati, Senior Vice President, and Head of PI System Business, AVEVA
Harpreet Gulati, Senior Vice President, and Head of PI System Business, AVEVA

Harpreet Gulati, Senior Vice President, and Head of PI System Business at AVEVA, said: “Harnessing the potential of green hydrogen could avoid up to 80 gigatons of cumulative CO² emissions by 2050, contributing to as much as 20% of total abatement required to drive the net-zero economy. The hydrogen sector will require a new transportation, distribution, and regulatory approach to operate successfully as an alternative fuel. Combining this with the latest digital twin and AI-enhanced capabilities, industries can discover new paths to drive efficiency and decarbonize.” During COP28, AVEVA executives will participate in various panels aimed at defining a clearer roadmap to a better future through digitalization.

Continue Reading

Trending