NNPC confirms $1.28 billion asset divestment deal between ExxonMobil and Seplat after two years legal disputes

The Nigerian National Petroleum Company Limited (NNPC Ltd.) announced the signing of a settlement agreement that facilitates the divestment of ExxonMobil’s stake in Mobil Producing Nigeria Unlimited (MPNU) to Seplat Energy Plc.

This is coming two years after ExxonMobil announced its divestment plan, prompting a reaction from NNPC and leading to a legal dispute that started in February 2022.

However, the national oil company said in a statement on Thursday that the divestment plan has been finalized, permitting Seplat Energy to acquire MPNU from ExxonMobil.

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The deal which was estimated at $1.28 billion has stalled for at least two years amid legal battles with ExxonMobil and NNPC.

However, NNPC said a settlement has been reached and the deal has been approved.

“Settlement agreement between NNPC Ltd. And MPNU, Mobil Development Nigeria Inc., and Mobil Exploration Nigeria Inc. signed regarding the proposed divestment of a 100% interest in MPNU to Seplat Energy Offshore Limited,” the NNPC said in a statement.

Backstory

On February 25 2022, Seplat Energy Plc disclosed its plan to purchase all shares of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Delaware for $1.28 billion.

• The deal involved taking over ExxonMobil Nigeria’s offshore shallow water operations.
• However, NNPC decided to invoke its Right of First Refusal (RFR) regarding the sale of these assets.
• This RFR is specified in the Joint Operating Agreement (JOA) of the Joint Venture (JV), which outlines NNPC’s stance on Seplat Energy Plc’s intended purchase of the shares.
• In May 2022, the federal government declined to approve the transaction, citing overriding national interest among other reasons for its decision.
• In addition, on July 6, 2022, a judge in Abuja issued an “order of interim injunction” that prohibits Exxon from finalizing any divestment in a subsidiary that holds four licenses in Nigeria.

President Tinubu’s Intervention

Meanwhile, President Tinubu met with the president of ExxonMobil, Liam Mallon, and other executives on Tuesday, assuring the team of a quick resolution of the agreement between ExxonMobil and Seplat.

The president stated that the federal government is dedicated to resolving the divestment disputes as fast as possible.

“We have been pushing for closure on divestment issues, and I believe the other party, Seplat, is open to this,” Tinubu said on Tuesday.

IOC opting for offshore investments

• Notably, ExxonMobil is not the only international oil company (IOC) deciding to move offshore and employing a divestment strategy to offload its stakes in the onshore segment of the oil and gas sector.
• In January, oil major, Shell Plc, reached an agreement to sell its Nigerian onshore oil assets to a local consortium for over $1.3 billion , pending government approval.
• In addition to the initial sum, Shell anticipates receiving extra payments of up to $1.1 billion. The purchasing consortium, named Renaissance, comprises ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin.
• Similarly, TotalEnergies stated plans to offload its minority stake in a significant Nigerian onshore oil joint venture following Shell’s divestment announcement.

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