• Sunday, June 16, 2024
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1yr after suing to stop IOCs divestments, NNPCL denies role

A year after Nigeria’s state-oil firm secured an injunction from an Abuja high court restraining the sale of shares of ExxonMobil Nigerian units to any third party, Mele Kyari, head of the NNPCL, claims the corporation had no hand in scuttling divestment plans of multinational oil companies.

In a speech at an oil conference in Abuja on Tuesday, Kyari said NNPC is not blocking any deal even with competitors, as he challenged operators on how much of the aspirations of the 2012 divestment have been met.

He severally restated that the NNPCL is not a regulator but equally a business-oriented organisation that is in competition with other players. However, this might just be a reflection of the change of guard at Aso Rock, because while Buhari held sway, NNPC was not only cavalier in its approach even with its joint partners, some operators viewed it as a regulator.

The order granted on July 6, 2022, at NNPC’s insistence, restrained ExxonMobil Nigerian units – Mobil Producing Nigeria Ltd and Mobil Development Nigeria Plc from selling, trading, allocating transferring, or disposing of their shares in their interests covered by or connected to the Joint Operating Agreement (JOA) between them and the NNPC.

The order restrains “sale of assets covered in Oil Mining Lease 68, Oil Mining Lease 69, Oil Mining Lease 70 and Oil Prospecting License 94, to anybody, person(s), company, consortium or entity howsoever described pending the determination of the Claimant/Applicant’s motion filed on the 5th of July or when the judicial tribunal is duly constituted and can make interim preservation orders..” the motion reads.

In February 2022, Seplat Energy Plc, had agreed to buy the entire onshore and shallow water asset of ExxonMobil in Nigeria, but the NNPC had opposed the deal.

Then Kyari had said that International Oil Companies (IOCs) that divested from Nigeria’s upstream sector have failed to address issues of abandonment and decommissioning of oil assets.

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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. IOCs prefer to sell their stake in these assets, leaving local oil firms to deal with those issues.

The NNPCL also objected that as a joint venture partner with Exxon’s Nigerian units, it had preemptive rights over any sale of the company’s assets. These pre-emption rights usually give the NNPC the right to match the best (financial) terms for any such acquisition and acquire the asset

ExxonMobil’s argument that the deal was not an asset sale but merely a sale of its shares to another entity did not convince the NNPC. This effectively scuttled the $1.2bn deal
Similar concerns were also adduced to scuttle divestment deals planned by Shell’s Nigerian units.

“It’s curious the NNPC boss will say this,” an official of one multinational company said.
It’s not clear why Kyari will deny NNPC’s role but there are whispers of President Tinubu’s house-cleaning operation headed for the NNPC. The central bank governor, the EFCC chairman, and heads of security agencies have been swept away in the exercise.

Speaking at the Nigerian Oil and Gas Conference, Kyari also said the NNPC was now a state agent helping to facilitate Production Sharing Agreements (PSA), and ensuring value is delivered.

“The PSA is not on the balance sheet of the NNPC, but we make sure you do your work because when you do it we are compensated 40 percent of your profit, so it is important for us, it is business for us,” he said.
He said previously that issues around the fiscal environment, capacity, and regulatory environment posed challenges, however, this is changing with the implementation of the PIA that enables everything.

“We will like to see more private sector people come in, we will not block their assets, as a business decision; we have to see how we can work together to build our divestments, we have seen the numbers and they work, we will complete our projects and for those waiting for us, I want them to start their own framework; we are not begging you bring but we are sharing how you can make money from you assets,” he said.