NUPRC: Ongoing IOCs’ Assets Divestment to Local Firms Not Yet Complete, Undergoing Due Diligence

  Says oil & gas assets in Nigeria can only be transferred in accordance with requirement

Peter Uzoho

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has refuted social media speculations suggesting that certain international oil companies (IOCs) have completed the sale of their assets to some indigenous companies, noting that the assets cannot be deemed sold yet.

The commission in a public notice issued yesterday, which was signed by its Chief Executive Officer, Mr. Gbenga Komolafe, clarified that oil and gas assets in Nigeria could only be transferred in accordance with the requirements of the relevant laws and regulations.

Although the commission did not mention the particular IOCs and local firms in question, but THISDAY understands that at the moment, three separate Asset Sale and Purchase deals between some IOCs and local firms are pending and waiting for approvals by the federal government.

They include the February 2022 deal for Seplat Energy’s to acquire Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation at the sum of N1.283 billion; and the September 2023 agreement for Oando to acquire the Nigerian Agip Oil Company (NAOC), a subsidiary of Italian energy group, Eni.

The last is the $2.4 billion January 2024 deal where Shell agreed to sell its entire shareholding in the Shell Petroleum Development Company (SPDC) to Renaissance Africa Energy Limited, a consortium of four Nigerian companies and one Switz firm.

However, all the three divestment deals are still pending and waiting for final approval by the government.

But in a swift reaction to the social media speculations that the IOCs have completed the deals and transferred assets to the local firms, NUPRC said nothing of such had happened.

NUPRC explained that the assets purported to have been sold by the divesting companies cannot be deemed sold yet, as the commission was currently carrying out due diligence on the transaction to ensure that the divestment does not result in unwarranted liabilities for the Federal Government of Nigeria.

The statement read, “The attention of the Nigerian Upstream Petroleum Regulatory Commission has been drawn to the ongoing discussions in the social media suggesting that certain international oil companies (divesting companies) have completed the sale of some of their oil and gas assets to some indigenous Nigerian companies.

“The Commission wishes to clarify that oil and gas assets in Nigeria can only be transferred in accordance with the requirements of the Petroleum Industry Act 2021, the Petroleum Act (where applicable), the Guidelines and Procedures for Obtaining Minister’s Consent to the Assignment of Interest in Oil and Gas Assets, 2021 (together the Applicable Laws).

“Under Nigerian law, while the entering into of a Sale and Purchase Agreement (SPA) between an assignor and an assignee constitutes an agreement to sell the relevant licence or lease in accordance with the terms of the SPA, the transfer can only be consummated upon the grant of Ministerial Consent to the transfer, following a recommendation from the Commission, and satisfaction of the conditions for the grant of the consent by the Minister.”

 The commission explained further that its recommendation to the Minister to grant Ministerial Consent for the transfer of a licence or lease will be based on a detailed and diligent review of the transaction by the commission.

It explained that this was, “to ensure the acquirers have the requisite competence in technical and financial ramifications, fulfilment of decommissioning and abandonment obligations; sustainability of environmental, social and corporate governance, including compliance with host community obligations, industrial and labour relations framework, confirmation that there are no legal encumbrances hindering the consummation of the transaction and that the acquirers are fit and proper persons and acceptable to the Federal government of Nigeria.”

The regulator maintained that these were criteria for the continued operational efficiency and effectiveness in the operations of the assets to ensure a sustainable increase in Nigeria’s oil and gas reserves and production.

It added “The Commission wishes the public to note that all the Divesting Companies and their potential assignees are familiar with the divestment process under the Applicable Laws and are currently complying with the relevant requirements. 

 “Accordingly, the general public is invited to take notice that the assets purported to have been sold by the Divesting Companies cannot be deemed sold yet, as the Commission is currently carrying out due diligence on the transaction to ensure that the divestment does not result in unwarranted liabilities for the Federal Government of Nigeria.”

Komolafe Advocates Robust Stakeholders’ Collaboration, Optimisation in Oil, Gas Sector

Meanwhile, Komolafe, has stressed the need for synergy, collaboration and optimisation of values among stakeholders in the oil and gas sector.

Komolafe, made the call during a recent meeting with the Managing Director of NNPC Exploration and Production Limited (NEPL), Mr. Nicolas Foucart and his team, which took place at the NUPRC head office in Abuja, where he also reaffirmed his commitment to promoting a conducive business environment in the nation’s hydrocarbon industry.

This is as upstream operators under the aegis of the Oil Producers Trade Section (OPTS) and the Independent Petroleum Producers Group (IPPG) have commended Komolafe and his NUPRC team for continuously churning out and implementing investment-friendly regulatory policies in the sector since he came on board as the commission’s chief executive.

A statement from his office yesterday, said the meeting between Komolafe and the NEPL boss provided a platform for the NUPRC boss to advocate for strategic partnership and enhanced operational efficiency in the industry.

During the discussion, the NUPRC boss highlighted the significance of collaboration among industry stakeholders, including government agencies, exploration and production companies and service providers.

He stressed that through collaboration entities would leverage their respective expertise, resources, and technologies to drive innovation and address the challenges facing the sector.

Komolafe, also underscored the importance of optimisation in upstream operations, citing the potential for cost savings, improved productivity, and environmental sustainability.

He encouraged the adoption of advanced technologies and best practices to streamline business processes, enhance asset performance, and mitigate risk associated with exploration and production activities.

According to the statement, Komolafe expressed his commitment to promoting a conducive business environment that encourages investment, good asset stewardship and local capacity development.

He emphasised the need for regulatory frameworks that support sustainable growth and social responsibility within the industry.

Responding, the Managing Director of NEPL, Foucart, who said he was on a familiarisation visit to the commission, acknowledged the value of Komolafe’s recommendations and expressed willingness to explore collaborative opportunities that align with the organisation strategic objectives.

The meeting concluded with a consensus on the importance of ongoing dialogue and cooperation to drive positive change and unlock the full potential of the upstream oil and gas sector in Nigeria.

Meanwhile, the OPTS and IPPG during a recent meeting with Komolafe held at the regional headquarters of the NUPRC in Lagos, had fruitful interaction with the regulator on the commission’s  Regulatory Action Plan for 2024 and near-term.

Speaking on behalf of his members, Chairman of OPTS, Mr. Osagie Okunbor, commended Komolafe for taking actions that enabled their business operation and investment inflow into the industry since he assumed office as the upstream regulator.

“Right from the very beginning of your coming into office, you have made it clear that yourself and your team see yourselves first and foremost as business enablers before you are regulators. I would like to appreciate and commend you and your team for the steps you have taken so far to foster collaboration between the players and the commission towards the growth of the Industry,” Okunbor stated.

He also appreciated Komolafe for the quality presentation he had made before the operators, where he laid out the details of the Regulatory Action Plan and sought the collaboration of the industry players for its successful implementation and positive result.

“So, we want to thank you CEO and to thank the team for this initiative. There is nothing as helpful as the commission or regulator creating avenue to look at regulations (post, past, present and anticipated) and have the opportunity to make inputs.

“I think you’ve demonstrated that over the past few months, specifically with the implementation of the PIA (Petroleum Industry Act) and we are looking forward, as you have rightly said in your speech, to begin to look at what you are putting forward to the industry.  The objectives are common between the regulator and the operators to ensure that you create a regulatory environment that is stable, that is transparent and beneficial to everyone, particularly the operators and investors,” Okunbor said,

Okunbor, who doubles as the Chairman of Shell Companies in Nigeria, said OPTS would work with the NUPRC and other sister associations in ensuring that the Regulatory Action Plan put forward which would later be operationalised were fit-for-purpose and essentially enable the business as espoused by the regulator.

“So, we want to thank you on behalf of the OPTS for convening this Regulatory Action Plan session and to commend the initiative, and to say, we would look forward to having many more of this type of engagement into the future,” he added.

Also speaking on behalf his members, Chairman of IPPG, Mr. Abdulrazaq Isa, who spoke virtually during the session, said the Regulatory Action Plan was loaded with a lot of foresight, innovation, creativity and commitment by the regulator to engender growth and development of the industry.

According to him, Komolafe is somebody who is bringing practical knowledge and the benefit of experience into policy making.

With the mutual commitment of both the regulator and the operators to make the regulatory policy work, the IPPG boss posited that the development portends a new dawn for Nigeria.

Isa, who is also the Chairman and Group Chief Executive Officer of Waltersmith Group, further said, “I believe that the way you have started the year is really unprecedented from the regulator’s point of view.

“To start the year with a policy action plan which will guide the operations of the industry in the near term as part of your long term policy strategy for the industry. I think this is really a commendable initiative by you.”

He added, “So, we are going to be counting on you and be rest assured of support of the industry to see that we make this work, and the long term objective for both of us to make Nigeria a very attractive destination for investment, and in that process, we want to make Nigeria very competitive.

“And therefore, the regulatory policy that you are putting in place is to ensure that we are competitive as a nation for the benefit of our people.

“So, thank you the CEO for putting this together and for getting us together to start the year on this note.”