By Lucas Ajanaku, Lagos and John Ofikhenua, Abuja
President Muhammadu Buhari has approved Seplat Energy Plc’s $1.28 billion purchase of Exxon Mobil Corp.’s shallow water business in Nigeria.
The approval puts to rest, efforts by the Nigeria National Petroleum Corporation (NNPC) Limited to block the deal.
Buhari, according to a statement by his Special Adviser on Media and Publicity, Femi Adesina, consented to the transaction due to the “extensive benefits” it will bring to Nigeria’s energy sector and the larger economy.
The decision clears the way for Seplat to complete an agreement announced in February to acquire four permits from Exxon.
Exxon Mobil entered into the landmark Sale and Purchase Agreement with Seplat Energy to acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Mobil Development Nigeria Inc, and Mobil Exploration Nigeria Inc, both registered in Delaware, USA.
Adesina said Buhari gave the approval in consonance with the country’s drive for Foreign Direct Investment (FDI) in the energy sector and considering the “extensive benefits of the transaction to the Nigerian Energy sector and the larger economy.”
“The president, in commitment to investment drive in light of the Petroleum Industry Act, granted consent to the Share Sales Agreement, as requested by the parties to the transaction, and directed that the approval be conveyed to all the parties involved.
“Exxon Mobil/Seplat are expected to carry out operatorship of all the oil mining licenses in the related shallow water assets towards production optimization to support Nigeria’s OPEC (Organisation of Petroleum Exporting Countries) quota in the short term as well as ensure accelerated development and monetization of the gas resources in the assets for the Nigerian economy,” he said in the statement.
Also, Buhari directed that all environmental and abandonment liabilities be adequately mitigated by Exxon Mobil and Seplat.
Seplat’s move to take over the asset suffered setbacks after NNPC asserted a right of first refusal on the deal. Seplat Energy in July said the state-owned NNPC Limited. won a court decision to block its quest to purchase the entire oil assets of Mobil Producing Nigeria Unlimited (MPNU), a local unit of oil major ExxonMobil.
The court decision made on July 6 was temporary and forbade MPNU and the defendants from consummating any asset disposal in MPNU, not excluding the share sale and purchase deal it struck with Seplat in February.
NNPC had prayed the court, State High Court of the Federal Capital Territory, to declare that a conflict happened between the state-owned oil company and MPNU over the “interpretation of preemption rights under their Joint Operating Agreement (“JOA”) and ordered NNPC and MPNU to arbitration as required by the JOA.”