An exciting affair
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Presenting the highlights of the transaction, which is the first of its kind since the entry into force of the Petroleum Industry Act (PIA), Seplat, for its part, set the purchase price at
The transaction, he said, would create one of the largest independent energy companies in both the
In addition, it was expected to generate a 14% increase in 2P gas reserves from 1,501 Bscf to 1,712 Bscf, as well as significant undeveloped gas potential of 2,910 Bscf (JV: 7,275 Bscf).
Nigerians are delighted as they await final ministerial consent to ensure that these strategically important national assets are wholly owned by Nigerians alongside the
In his incisive analysis,
Very instructively, Mackenzie added: “Because this is a corporate acquisition, NNPC has no right to pre-empt an agreement under the Joint Operating Agreement (JOA), that governs the joint venture. This means that ministerial consent would be the only remaining obstacle, although nothing can be taken for granted.
Misinterpretation of the JV Agreement
Unfortunately, amid this local and international acclaim, the NNPC seems oddly more interested in throwing wrenches in the works. In order to block the deal, NNPC, as widely reported in the media, through its Group Managing Director (GMD), Mele Kyari, wrote to MPNU, informing it of its intention to exercise a right of first refusal on the agreement.
“We are aware that you have reached an agreement to divest yourself of the onshore and shallow water joint ventures… We are clearly interested,” the GMD said.
Meanwhile, a recently published article in support of NNPC’s action quoted an alleged oil industry source asserting NNPC’s rights under the law to exercise such preventative powers.
NNPC articulates its movement on a
Regarding the transfer and assignment of interests, Article 19.4 provides: Subject to sub-clauses 19.1 and 19.2, if a Party has received an offer from a third Party, which it wishes to accept, for the assignment or transfer of its participation hereunder (the “Selling Party”), it will give the other Party the priority right and the option in writing to purchase this Participation as provided for in sub-clauses 19.4.1 to 19.4.2 .
Sub-Clause 19.4.1 provides:
Sub-Clause 19.4.2 states: “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 these participations to it, in which case the assignment or transfer will be made to it under the same conditions or under equivalent conditions”.
In the meantime, these provisions could not be read or understood apart from the definition of “participation” by the same agreement.
Section 1.24 states: “Participation means the undivided percentage interest held by the Parties from time to time in the concession(s), the Common Property and the rights and obligations under this Agreement, namely: sixty percent ( 60%), in the case of NNPC; and forty (40%) in the case of Mobil”.
Thus, these provisions clearly show that the NNPC is completely confusing things because the transaction between Seplat and
This is the major fact that NNPC needs to correct so that it can stop complicating a very simple question and do
In any case, the ExxonMobil-Seplat transaction is not the first in the sector in recent times. Many have wondered why NNPC did not exercise the same pre-emptive action in SPDC’s divestments.
Recently, NNPC and analysts supporting its case argued that with its transition to a for-profit, limited liability company registered under the PIA, there was talk of reshaping and optimizing its portfolio by acquiring high-value assets. performance, low vulnerability and huge gas potential. For this reason, it favors the acquisition of assets sold within the framework of MPNU JV rather than those of
Moreover, the NNPC does not enjoy popularity as one of the managers. If NNPC were to be an airline, one wonders how many Nigerians would be confident flying in its planes. If the NNPC was a hospital, how many Nigerians would give their lives to run it?
As the sole importer of fuel, Nigerians still face not only intermittent fuel shortages, but they have yet to recover from the importation of toxic fuel which has wrecked vehicles and strained households.
Worse still, the NNPC has yet to tell Nigerians how the country’s daily fuel consumption has risen from around 30 million liters around seven years ago to around 102 million liters and more.
Under NNPC’s watch, refineries have degenerated from producing enough for local consumption, to producing little, and now nothing. In 2020, NNPC recorded N10.27 billion in operational expenditure without refining a single drop of fuel. He is unable to repair any of the refineries, even with the allocation of a
The NNPC has struggled to meet its statutory obligations to the Federation account in recent years. Despite soaring oil prices on the international market, she was unable to deposit anything into the Federation’s account in
As a result, many Nigerians have wondered why an indebted NNPC is accumulating more debt so quickly.
The issue of gas prioritization
Meanwhile, it is reported that NNPC’s interest in taking 100 possession of the assets in question has been informed by its efforts not to risk another partner on the NNPC MPNU JV which may not see the monetization of the gas component assets as a priority. This should not even be considered given Seplat’s profile in gas investments and its leading role in
In these contexts, it is understandable that industry players believe that the NNPC has not only missed its mark, but also exceeded itself, playing on this unnecessary interference which discourages investors. He should back off.
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