The Nigerian Upstream Petroleum Regulatory Commission (NUPRC)’s approval of the Oando Plc acquisition of Eni’s 100 per cent stake in the Nigerian Agip Oil Company Limited (NAOC Ltd) within 18 months has raised serious concerns.
It is alleged that other transactions like the Shell/Renaissance and the Mobil/Seplat deals — continue to suffer delays.
Eni first announced the deal with Oando on September 4, 2023, but it stalled after the state-owned Nigerian National Petroleum Company (NNPC) which holds the remaining 60 per cent stake in the projects, suggested it could exercise its pre-emption rights.
Within 12 months, NNPC retracted its position, the deal was approved by NUPRC on July 24, 2024 and completed on August 22, 2024.
Related news
- NUPRC Gives Metering Audit and Advanced Cargo Declaration Project teams four months
- NUPRC adds 17 new blocks to 2024 oil bid round
- NUPRC to accelerate oil and gas development projects- Chief Executive
This swift approval process for Oando, run by the nephew of Nigerian president Bola Tinubu, has raised question marks on slow approvals facing other indigenous players such as Seplat and Renaissance, who also agreed to buy onshore and shallow water assets of oil majors ExxonMobil, TotalEnergies, and Shell.
“Oando gets express approval for its asset purchase within 12 months and others don’t; So far there is no public explanation on why the deal got priority and Seplat/ExxonMobil is still dragging,” a senior oil executive told BusinessDay.
He added, “The deal between Renaissance and Shell continues to stall. The only deal that has fully scaled through so far is the one involving Oando. No clarity on why it got accelerated approval”.
The persistently delayed divestments come three years after the Petroleum Industry Act (PIA), which was publicised as the tonic to rewrite Nigeria’s decades-old relationship with its foreign oil partners and alter everything from fiscal terms to the structure of the state oil firm comes into law.
Findings show section 95 subsection 10 of the Petroleum Industry Act states that “where the application for an assignment or a transfer of a petroleum prospecting licence or petroleum mining lease is refused, the commission shall inform the applicant of the reasons for the refusal and may give reasonable time within which further representations may be made by the applicant or by third parties in respect of the application”.
Clementine Wallop, senior advisor at Horizon Engage told S& P Global it was “very encouraging to see one of these divestment deals cross the line,” but said the link between the presidency and the company will “doubtless draw some comment.”
“The current status where the sellers have signalled a full intention to leave, whereas the buyers are yet to effectively take over the operations of the assets is very detrimental to the sector and the country,” Abdulrazaq Isa, chairman of Independent Petroleum Producers Group, said at this year’s Nigerian International Energy Summit in Abuja.
BusinessDay’s findings showed Shell’s $1.3bn deal to offload Nigerian onshore assets to Renaissance hits a roadblock, with the NUPRC alleging that the buyer’s technical and financial capacity doesn’t meet new standards.
The complexities surrounding abandonment, decommissioning and the surge in environmental issues, legal crises, labour conflicts, vandalism, and capital and technical challenges for Nigerian companies are upsetting stakeholders.
“The industry continues to suffer from a lack of transparency concerning divestments,” said Preye Orodu, lead engineer at KEOT Synergy.
Orodu said the industry remains heavily politicised, citing recent incidents such as the Dangote Refinery saga, ExxonMobil’s divestment to Seplat Energy, and Shell’s sale to Renaissance.
“These developments do not project a favourable image for a country seeking foreign direct investment (FDI),” he added.
BusinessDay findings showed the prolonged negotiation around the sale of ExxonMobil assets to Seplat has cost the country about 480,000 barrels per day (bpd) worth about $38.4 million daily.
“Seplat has proven to be a strong indigenous player and would help to boost Nigeria’s oil and gas production from the ExxonMobil assets when the deal pulls through,” said Etulan Adu, an energy analyst. Adu said Nigeria is no longer a darling for major International Oil Companies (IOCs) to invest billions of dollars on projects onshore or shallow water because of the difficult operating environment and reputational cost from legal battles.
“As a nation, we can’t even put forward capital for major oil and gas projects for any IOC to try and bargain for shares. Recently, Indonesia pulled a deal of more than $10 billion for the development of an offshore gas asset with Eni,” Adu said. “So the IOCs are focusing on serious regions.”
In a detailed response, Olaide Shonola, the head of the public affairs Unit at NUPRC, emphasised that all divestment approvals, particularly those involving Oando and Seplat, were conducted with full compliance to PIA and established regulatory frameworks.
“The Commission has been thorough in adhering to the legal and procedural requirements set by the PIA, ensuring transparency and accountability at every step,” Shonola stated.
According to the NUPRC, the divestment by Exxonmobil to Seplat Energy Offshore Limited is currently undergoing the same consent approval process and is expected to be completed within the 120-day timeline provided by the act.
On a comparative basis, the regulator, NUPRC, said that ExxonMobil through a letter dated February 24, 2022, notified the commission of its intention to assign 100 per cent of its issued shares to Seplat Offshore Energy Limited.
It said the commission did not consent to this assignment because ExxonMobil failed to obtain a waiver of pre-emption rights as well as the consent of NNPC, its partner on the blocks to the divestment.
“It is worth pointing out that NNPC’s right to pre-emption and consent under the NNPCL/MPNU Joint Venture Joint Operating Agreement was the subject of Suit No: FCT/HC/BW/173/2022 Nigerian National Petroleum Company Limited versus Mobil Producing Nigeria Unlimited, Mobil Development Nigeria Inc., Mobil Exploration Nigeria Inc. and NUPRC,” it added.
But in June 2024, NUPRC said NNPC and ExxonMobil (MPUN) resolved their dispute through a letter dated June 26, 2024, informing the commission of the resolution of the dispute.
“Upon resolution of this dispute, the commission communicated its no-objection decision to the assignment via a letter dated July 4, 2024, and requested MPNU to provide information and documentation required under the commission’s due diligence checklist to enable the commission to conduct its due diligence as required under the PIA.
“MPNU by letter dated July 18, 2024, provided the information requested by the commission. Accordingly, MPNU’s application to the commission for consent is currently undergoing due diligence review, under the same divestment framework applied to the NAOC-Oando and Equinor-Chappal divestment.
“The commission’s due diligence process is ongoing and within the 120-day timeline required by the PIA,” it added.
NUPRC rejects Shell’s $1.3bn onshore asset sale
Meanwhile, the NUPRC has rejected Shell’s planned $1.3 billion sale of its onshore assets to the Renaissance Consortium, sources familiar with the matter said.
The sale, which required NUPRC’s approval under the Petroleum Industry Act (PIA), would have seen Shell divest its stake in the Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance, a consortium including ND Western Limited, Aradel Holdings Plc, the Petrolin Group, FIRST Exploration and Petroleum Development Company Limited, and Waltersmith Group.
NUPRC CEO Gbenga Komolafe said the commission had established a divestment framework in April to assess applications for ministerial approval of Shell’s divestment plans. The framework covers various aspects, including technical expertise, financial stability, legal compliance, environmental remediation, and host community engagement.
Komolafe emphasized that Renaissance needed to demonstrate its technical capability to manage the assets effectively.
The deal’s value had declined from $2.4 billion in January 2024 to $1.3 billion by August, partly due to an ongoing legal dispute between Shell and Global Gas and Refining Limited. The local firm has sought a court injunction to prevent NUPRC from approving the sale, citing contractual disagreements with Shell.
Shell, in response, clarified that it was not directly selling the onshore assets to Renaissance for $1.3 billion but was instead transferring shares.
