Nigeria’s oil regulator overrules Presidency on $1.28bn Seplat/Mobil deal

By Akin Irede
Posted on Tuesday, 9 August 2022 09:37

A floating fuel filling station belonging to Nigeria’s state oil firm Nigerian National Petroleum Corporation (NNPC) sits idle on a river in the oil rich southeastern Delta state, Nigeria June 18, 2017. REUTERS/Tife Owolabi

Nigeria’s Presidency and the Nigerian Upstream Petroleum Regulatory Commission have disagreed over the $1.283bn sale and purchase transaction between Seplat Energies and Mobil Producing Nigeria Unlimited.

Nigeria’s national oil firm, the Nigerian National Petroleum Company (NNPC), which has been in a joint venture with Mobil, had blocked the company’s attempt to sell off its assets to Seplat, arguing that it has the right of first refusal based on the terms of their contract. The NNPC had also obtained a court order stalling the transaction.

The transaction entailed the acquisition of ExxonMobil’s offshore shallow water assets in Nigeria and was expected to boost the country’s oil production capacity which has been in decline.

Overruling the NNPC on Monday, President Muhammadu Buhari’s office put out a statement approving the transaction, basing his argument on the need to promote investments in the sector.

According to the statement, Buhari took the decision based on his power as the Minister of Petroleum.

“The president, in commitment to investment drive in light of the Petroleum Industry Act (PIA), 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,” it read.

No to the transaction

Hours later, however, the NUPRC which regulates the upstream sector stated that the transaction would not go on.

The CEO of the NUPRC, Gbenga Komolafe, argued that by the provisions of the PIA, the law that regulates the oil sector, only the NUPRC had the power to approve such a transaction.

“As it were, the issue at stake is purely a regulatory matter and the commission had earlier communicated the decline of ministerial assent to ExxonMobil in this regard. As such, the commission further affirms that the status quo remains,” Komolafe said.

  • Section 95(15), the PIA says that a holder of a petroleum exploration licence shall not assign or transfer his licence or any right, power or interest without prior written consent of the commission.

Buhari’s administration has witnessed unprecedented internal rivalry since 2015 which often raises questions on whether he is fully in charge. His wife, Aisha, had also accused Presidency officials of undermining her husband and issuing statements without his express approval.

Understand Africa's tomorrow... today

We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.

View subscription options