June 19, 2024

NNPC eats humble pie, claims response to ENI/Oando acquisition deal was misinterpreted

Oredola Adeola

 

The Nigerian National Petroleum Company Limited (NNPCL) seems to have eaten humble pie for now, as  it denied opposing ENI’s planned onshore asset divestment deal with Oando PLC, claiming that the letter written by its subsidiary, NNPC Exploration & Production Limited (NEPL), to its JV Partner, Nigerian Agip Oil Company Limited (NAOC), was only seeking to call the parties involved in the deal to adherence to the Joint Operating Agreement (JOA) clauses that will be required to protect the transaction, now and in the future.

 

Garba Deen Muhammad Chief Corporate Communications Officer NNPC Ltd, made this known in a statement, which attempt to correct what it described as wrong interpretation of the NEPL routine communication.

 

According to the NNPCL Chief Corporate Communication Officer, NEPL is only drawing attention to certain important clauses in the Joint Operating Agreement (JOA) between it, NAOC and OOL; which might have been overlooked in error. Adherence to those clauses will protect the transaction, now and in the future.

 

He said, “It has come to our notice that a routine communication in the form of a letter written by NNPC E&P Limited (NEPL) to its JV Partner, Nigerian Agip Oil Company Limited (NAOC) is being interpreted to suggest that NNPC Ltd. is opposed to the sale of NAOC shares to Oando PLC.”

 

GarbaDeen emphasised that the interpretation of the letter is not correct. He stated that it was sent by NEPL, an NNPC Ltd. subsidiary and that nowhere was opposition or objection to the transaction mentioned in the letter.

 

Ali Zarah, Managing Director of NEPL, dated September 4, in a letter addressed to the Managing Director of Nigerian Agip Oil Company Ltd, faulted ENI’s planned onshore asset divestment deal with Oando PLC, on the ground that it was exercising its right of first refusal as contained in the Joint Operating Agreement (JOA).

 

 

Zarah in the letter noted that if the deal goes through, it will have far-reaching contractual/legal implications in relation to the joint Operating Agreement dated July 1991 governing the operations of the NAOC/NEPL/OOL Joint venture.

 

 

The letter said, “Clause 19.11 of the JOA provides that “No party may assign or transfer its interest or any part thereof without the prior written consent of the other parties, which consent shall not be unreasonably withheld.

 

 

“We have highlighted the above provisions of the JOA to underscore the point that the purported assignment, even if valid, should by no means translate to transfer of operatorship to OOL. if NAOC’s divestment turns out to be valid, it will be incumbent on NEPL and OOL to decide on a successor operator,” the NNPCL letter stated.

 

 

The NNPC Ltd in the letter, further  emphasised  that the failure to obtain the written consent of its NEPL, constituted a “grave breach of the terms of the JOA, and NEPL reserves its rights in relation to the said breach.

 

 

This is about the first time that the NNPCL under Mele Kyari, Group Chief Executive will be humbled on a transaction such as this.

 

It would be recalled that the NNPCL is still stalling the SEPLAT/ExxonMobil deal, with a subsisting legal tussle in the exercise of its Right of Pre-emption on ExxonMobil’s planned sale of its entire asset in Nigeria’s onshore and shallow waters to SEPLAT.

 

The NNPC had in the letter claimed that since it has now transformed into a profit-driven company, it  then has the capacity and is in the right position to buy over the share of ExxonMobil in Joint ventures.