July 21, 2024

President Buhari backs off on Seplat-Exxon Mobil deal

Oredola Adeola

The raging controversy over the acquisition of the entire share capital of Mobil Producing Nigeria Unlimited (MPNU) by Seplat Energy Offshore Limited, has continued to take different dimensions, this is just as President Muhammadu Buhari, has reportedly withdrew the earlier consent he gave on Monday, in respect of the $1.3billion deal.

The latest Presidential directive was contained in a statement by Garba Shehu, Senior Special Assistant to the President on Media and Publicity issued on Wednesday.

According to Shehu Garba, President’s reversal of his earlier approval of the deal, was in line with the stance of the NUPRC and following the guidelines of the provisions of the PIA.

According to him, the confusion over ExxonMobil shares was because “the various agencies involved in the decision had not coordinated well among themselves and having looked at all of the facts with all of the ramifications, the president decided the position of the regulator is to be supported.”

Recall that the President had through, Femi Adesina, Special Adviser to the President on Media and Publicity, on Monday, consented to the acquisition of Exxon Mobil shares by Seplat.

Femi Adesina had then claimed that President Buhari gave Ministerial approval to the deal in order to pave the way for the development of the assets and also attract foreign direct investment(FDI) into the country’s oil and gas sector.

The management of Seplat also in statement published by EnergyDay also claimed it received a consent letter from the President Buhari, who doubles as the Minister of State for Petroleum Resources, “graciously approving” the cash acquisition of the entire share capital of Mobil Producing Nigeria Unlimited (MPNU).

Gbenga Komolafe, Chief Executive, Nigerian Upstream Petroleum Regulatory Commission, NUPRC who kicked against the Presidential consent to the deal, claimed the Ministerial approval granted against the provisions of the Petroleum Industry Act(PIA).

EXPLANING SEPLAT’S TRANSACTION

The major highlight and sequence of the transaction in summary is further explained by Seplat Energy stating that it is a wholly Nigerian subsidiary of Seplat Energy Plc and has entered into a Sale and Purchase Agreement to acquire the entire share capital of MPNU for a purchase price of $1,283 million plus up to $300 million in contingent consideration.

The transaction encompasses the acquisition of the entire offshore shallow water business of ExxonMobil in Nigeria, which is an established, high-quality operation with a highly skilled local operating team and a track record of safe operations, producing substantial crude and gas volumes.

SIGNIFICANCE OF THE DEAL

EnergyDay has gathered that Nigeria is expected to increase crude production from the assets to 146,000bpd, while gas reserves will increase to 650MMbbl, leaving a potential recovery of nearly 3 billion scf.

The transaction is seen as supporting Nigeria’s energy transition and the objectives of the Petroleum Industry Act. It is also the first transaction to be announced since the Nigerian government’s recently ratified Petroleum Industry Act (“PIA”), and supports its key objectives.

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