An exciting deal
The business world and corporate
The President,
Rendering highlights of the deal, which is the first of its kind since the coming on stream of the Petroleum Industry Act (PIA), Seplat, on its part, put the purchase price at
The transaction, it said, would create one of the largest independent energy companies on both the
In addition, it was expected to deliver a 14 per cent increase in 2P gas reserves from 1,501 Bscf to 1,712 Bscf, plus significant undeveloped gas potential of 2,910 Bscf (JV: 7,275 Bscf).
Nigerians are excited as they await the final Ministerial Consent to bring such strategically important national assets fully into Nigerian ownership alongside the
In its incisive analysis,
Very instructively, Mackenzie added: "Because this is a corporate acquisition, NNPC has no rights to pre-empt a deal under the Joint Operating Agreement (JOA), which governs the JV. This means that ministerial consent would be the only hurdle remaining, although nothing can be taken for granted.
Misinterpretation of JV Agreement
Unfortunately, amid this local and international acclaim, the NNPC appears strangely more interested in throwing spanner in the works. In a move to block the transaction, the NNPC, as widely reported in the media, has through its Group Managing Director (GMD), Mele Kyari, written to MPNU, notifying it of its intention to exercise a Right of Pre-emption over the deal.
"We are aware that you reached an agreement to divest from onshore and shallow waters JVs... . Clearly we are interested", the GMD was quoted as stating.
Meanwhile, a recently published article in support of NNPC's action quoted purported oil industry source of affirming NNPC's rights under the law, to exercise such pre-emptive powers.
NNPC hinges its move on a
Regarding transfer and assignment of interest, Article 19.4 provides: Subject to sub-clauses 19.1 and 19.2, if any Party has received an offer from a third Party, which it desires to accept, for the assignment or transfer of its participating hereunder (the "Transferring Party"), it shall give the other Party prior right and option in writing to purchase such Participating Interest as provided in sub-clauses 19. 4.1 to 19 .4.2.
Sub-clause 19.4.1 provides:
Sub-clause 19 .4.2 states: "Upon receipt of the notice referred to in Sub-clause 19. 2.1, the other Party may within thirty (30) days thereafter, request in writing the assignment and transfer of such Participating Interests to it, in which event the assignment or transfer shall be made to it on the same or equivalent terms".
Meanwhile, these provisions could not be read or understood in isolation of the definition of a "Participating Interest" by the same Agreement.
Article 1.24 states: "Participating Interest means the undivided percentage interest from time to time held by the Parties in the concession (s), the Joint Property and rights and obligations under this Agreement, namely: sixty per cent (60%), in case of NNPC; and forty (40 per cent), in the case of Mobil".
Thus, these provisions clearly show that the NNPC is absolutely mixing things up because the transaction that happened between Seplat and
This is the major fact NNPC needs to get right so it could stop convoluting a very simple matter and making
Matters arising
In any case, the ExxonMobil-Seplat transaction is not the first in the industry in recent times. Many have wondered why the NNPC did not exercise the same pre-emption action in the divestments by SPDC.
Of recent, the NNPC, and analysts pushing its case have argued that with its transition into a registered profit-making and limited liability company vide the PIA, it was out to reshape and optimise its portfolio by acquiring assets with high performance, low vulnerability and huge gas potential. For this reason, it prioritises the acquisition of divested assets under MPNU JV over those in
Besides, the NNPC does not enjoy popularity as one of the managers. If the NNPC were to be an airline, it is to be wondered how many Nigerians would be confident to fly in its planes. If NNPC were a hospital, how many Nigerians would surrender their lives to it to manage?
As the sole importer of fuel, Nigerians are still dealing with not only intermittent biting fuel scarcity, but they are also yet to recover from the importation of toxic fuel that have wrecked vehicles and put households through hardships.
Worse, the NNPC is yet to tell Nigerians how the nation's daily fuel consumption jumped from about 30 million litres about seven years ago to about 102 million litres and above.
Under NNPC's watch, the refineries have degenerated from producing enough for local consumption, to producing little, and now nothing. In 2020, NNPC recorded N10.27 Billion in operational expenses without refining a single drop of fuel. It is unable to fix any of the refineries, even with the award of a
The NNPC has been struggling to meet its statutory obligations to the Federation Account in recent years. Despite the surge in oil prices in the international market, it was unable to remit anything to the Federation Account in
Therefore, many Nigerians have wondered why a debt-burdened NNPC is so quick to accumulate more debts vide the
The question of prioritisation of gas
Meanwhile, it is reported that NNPC's interest in taking 100 possession of the assets in question was informed by its efforts not to risk a another partner on the NNPC MPNU JV that might not see the monetisation of the assets gas component as a priority. This should not even be considered given Seplat's profile in gas investment and its leading role in
Against these backdrops, it is understandable why industry players believe that the NNPC has not only misfired, but is also overreaching itself, playing up those needless interferences that discourage investors. It should retreat.
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