The Federal government has turned down the application for ministerial consent necessary to seal a $1.3bn planned deal between Seplat Energy Plc, a major energy company in Nigeria, and US-based ExxonMobil.
According to the CEO of Nigerian Upstream Regulatory Commission (NUPRC), Gbenga Komolafe, the government cited overriding national interest, failure to follow due process and inappropriate application as major reasons for rejecting a deal that could deliver higher taxes, increased production, and generate more oil revenue to Africa’s biggest oil producing country.
“We regret to inform you that His Excellency, the Minister of Petroleum Resources has declined his consent to the transaction,” NUPRC said in two separate letters addressed to the Chairman/ Managing Director, Mobil Producing Nigeria Unlimited,Richard Laing as well as the immediate past Chairman of Seplat Energy, Dr. ABC Orjiako.
Overriding national interest
Concerning overriding national interest, NUPRC acknowledged Mobil Oil still remains to all intents and purposes, the assignor of the asset under the Nigerian law.
However, under the Nigerian law, NUPRC said “that overriding National interest will always be the compass of the law. Paragraph 3.1.1 of the guidelines also expressly restates that assignment shall include, but not be limited to: ‘assignment by way of exchange or transfer of shares: This shall entail the acquisition of part or all of the shares of a company which holds an OPL, OML, MF or OGPL in Nigeria.”
Read also: Seplat-ExxonMobil $1.2bn deal delayed on politics
According to the regulatory commission, until an assignment was completed, including the granting of Ministerial consent to such assignment, the leaseholder remains the registered owner of the asset and the only one with the locus to interact with the government in respect of the asset.
Failure to follow due process
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.”
Inappropriate application
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 consent to the transaction, not Seplat. Consequently, you are hereby requested to revert to MPNU, the assignor, to receive updates on your application,” it stated.
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