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Report: FG declines to approve Seplat Energy, Mobil Producing Oil assets acquisition deal

Report: FG declines to approve Seplat Energy, Mobil Producing Oil assets acquisition deal
May 19
15:38 2022

The federal government says it declined to consent to the proposed acquisition of Mobil Oil Producing Nigeria Unlimited (MPNU) assets by Seplat Energy, due to “overriding national interest”.

According to Thisday, Gbenga Komolafe, chief executive officer (CEO), Nigerian Upstream Regulatory Commission (NUPRC), said this in two separate letters addressed to Richard Laing, chairman/managing director, MPNU as well as Ambrosie Orjiako, the immediate past chairman of Seplat Energy.

In February, Seplat Energy announced plans to acquire MPNU assets from ExxonMobil.

But the deal was subject to ministerial consent and other required regulatory approvals.

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A few weeks later, amid claims that Nigerian National Petroleum Company (NNPC) Limited had opted to exercise its right of first refusal (RFR) on the sale of the assets, Seplat said its deal with ExxonMobil Corporation was valid and subsisting.

In the letter addressed to Laing, Komolafe emphasised that regardless of the mode of the transaction, Mobil Oil still remains the assignor of the asset under Nigerian law, and is responsible for compliance.

“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,” the commission was quoted as saying.

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“Even if the transaction has been between Seplat Energy Offshore Limited and the MPNU shareholders, the responsibility to ensure compliance with Nigerian laws, rules, and regulations, always remains that of MPNU, the entity that was awarded the assets. 

“We regret to inform you that His Excellency, the minister of petroleum resources has declined his consent to the transaction.

“Nothing in this letter shall be deemed to be a waiver, on the part of the commission, of any rights under the guidelines, any law, rule, or regulation, and the commission reserves all its rights in respect of the subject matter.”

Komolafe also highlighted the contents of the letter that MPNU had written to the NUPRC on the proposed acquisition.

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He referred to the section that said the transaction was between parties who were not privy to the joint operating agreement (JOA) between the NNPC and the MPNU dated June 28, 1990 — and that it does not trigger any relevant rights or obligations under the JOA for either NNPC or MPNU. 

In addition, the regulator made reference to another aspect of MPNU’s letter on the matter, which said its shareholders would be proceeding with their efforts to satisfy the conditions required for the approval of the intended transaction.

“You may also be aware that the commission is in receipt of a letter on 10th of March 2022, written by Seplat Energy to the minister of state for petroleum resources, requesting the consent of the minister of petroleum resources to the transaction. This letter was received by the commission on March 30, 2022,” Komolafe said.

“Be advised that even if the transaction in question were between parties who are not privy to the JOA, MPNU remains the leaseholder of the assets subject to the transaction and the focal point of contact with the federal government of Nigeria on any matter or dealings with the assets.”

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In addition, Komolafe said the overriding national interest would always be the compass of the law.

He said 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.”

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Komolafe said 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 in the position to interact with the government.

In the letter addressed to Orjiako, he equally highlighted relevant sections in the guidelines and procedures for obtaining the minister’s consent to the assignment of interest in oil and gas assets 2021.

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“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,” he said.

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