TheCable

The Nigerian National Petroleum Company Limited Exploration and Production (NEPL) has expressed concerns about the divestment of the Nigerian Agip Oil Company’s (NAOC) participating interest in its joint venture (JV) partnership, over non-conformity to regulatory processes, TheCable understands.

Oando had announced that it reached an agreement with Eni, on the acquisition of a 100 percent stake in NAOC Limited.

The energy firm said the transaction translated to the acquisition of 20 percent participating interests in oil mining leases (OMLs) 60, 61, 62, and 63 — operated by NAOC.

Prior to the deal, which is subject to regulatory approvals and ministerial consent, NAOC held a 20 percent participating interest in its JV partnership with non-operators NNPC E&P (60 percent) and Oando (20 percent).

It also held a 5 percent participating interest in the Shell Production Development Company (SPDC) — which Eni said is not included in the transaction and will be retained in its portfolio.

Others also involved in the SPDC JV include — Shell (30 percent), TotalEnergies (10 percent), and NNPC (55 percent).

If the deal is successfully completed, Oando’s current participating interests in oil mining leases (OMLs) 60, 61, 62, and 63, will increase from 20 percent to 40 percent.

NNPC sources familiar with the development told TheCable that the NAOC did not pre-inform NEPL about the proposed assignment of its interest to Oando.

The source also said Agip Nigeria “failed to obtain the requisite pre-divestment written consent” in line with their joint operating agreement (JOA).

It was further learnt that the transaction was at risk of being nullified by NEPL since a formal agreement was not obtained from the NNPC subsidiary.

TheCable was told that the NEPL wrote to NAOC, seeking clarity on the deal, and noting that the divestment of NAOC’s participating interest translates to non-compliance with the terms of the JOA.

Citing provisions in the JOA, the source said Oando and NEPL were obligated to appoint one of the non-operators as a successor operator.

In a statement, the NNPC said it is not against the sale of Agip Nigeria to Oando, saying its subsidiary was only raising concerns over JOA terms.

“It has come to our notice that a letter written by NEPL to NAOC is being interpreted to suggest NNPC Ltd is opposed to the sale of Agip Nigeria to Oando. This is not true,” said Garba Deen Muhammad, chief corporate communications officer,
NNPC.

“The letter was sent by NEPL, an NNPC Ltd subsidiary. But pls note that it is not an objection to the transaction. NEPL is only drawing attention to certain important clauses in the JOA, which might have been overlooked in error. Adherence to those clauses will protect the transaction now and in the future.”

Editor’s note: This story has been updated with the response of the NNPC.