NNPCL, ExxonMobil Reach Settlement Agreement on $1.28bn Oil Assets’ Divestment, Deal Nears Completion

*National oil company gets additional 10% interest as parties await regulatory approval

Emmanuel Addeh in Abuja and Peter Uzoho in Lagos

Nigerian National Petroleum Company Limited (NNPCL) and ExxonMobil, finally, agreed on a settlement deal yesterday for the $1.28 billion assets’ divestment plan by the American oil major.
Although there was no formal statement from NNPCL, in a short message, it announced on its X page that the agreement will pave the way for the International Oil Company (IOC) to sell off its 100 per cent interest to Seplat Energies after the settlement.
THISDAY learnt last night that with the new settlement agreement, the NNPCL now has an additional 10 per cent interest, making a total of 70 per cent to  ExxonMobil’s 30 per cent as  against 60/40 per cent before the deal was reached.

In addition to that, Seplat Energies, it was gathered, signed a waiver for NNPC, in case the company intends to allow a third party participant or investor in the future, a deal that ExxonMobil consented to.
It will also see the reopening of up to 140 wells that had been shut in in the last few years, a development that will see Nigeria increase its overall production significantly.

The national oil company stated, “(A) settlement agreement between NNPC Ltd and Mobil Producing Nigeria Unlimited, Mobil Development Nigeria Inc., and Mobil Exploration Nigeria Inc. (has been) signed regarding the proposed divestment of a 100 per cent interest in Mobil Producing Nigeria Unlimited to Seplat Energy Offshore Limited.”
NNPCL followed it up with some images from the event, comprising some of the top officials of the organisation, including its Executive Vice President (Upstream), Oritsemeyiwa Eyesan; Chief Upstream Investment Officer, NNPC Upstream Investment Management Services (NUIMS), Mr. Bala Wunti; and some top ExxonMobil executives.

The consummation of the agreement had been delayed since February 2022, after NNPCL first announced that it had a right of first refusal to the assets that were up for divestment.
The industry regulator, Nigerian Upstream Petroleum Regulatory Company Limited (NUPRC), had also raised issues with the process leading to the announcement, insisting that due diligence must be carried out.

NUPRC recently released a new framework for present and future divestments by operators in the Nigerian oil industry.
Minister of State, Petroleum (Oil), Senator Heineken Lokpobiri, had repeatedly assured that once the documents got to his table, he would not waste an additional day before signing them to allow the completion of the deal that had been stalled for over two years.
The development will now allow the parties proceed to the next stage with NUPRC, which had essentially listed some conditions to be met before the deal could be approved.

With the settlement agreement now signed between NNPCL and ExxonMobil, the protracted divestment scaled one hurdle among a couple of issues delaying conclusion of the asset sale and purchase deal, which started over two years ago.
The commission had in its asset divestment guidelines issued recently stated that one of the requirements for conclusion of deals was mutual settlement by asset owners.

Others, according to the chief executive of the commission, included: technical capacity, financial viability, legal compliance, decommissioning obligations, host community engagement, labour relations, and data repatriation.
President Bola Ahmed Tinubu had recently directed Lokpobiri and NNPCL to resolve the delayed $1.28 billion the deal.
While hosting a delegation of ExxonMobil executives, led by President of ExxonMobil Upstream Company, Mr. Liam Mallon, in Abuja, Tinubu had assured that the ExxonMobil-Seplat asset divestment deal would be concluded as soon as possible.
In addition, Lokpobiri, in mid-April, while speaking at an industry event in Lagos, revealed that Nigeria lost $34 billion in the last two and a half years due to the fall in production from the assets being divested by ExxonMobil to Seplat Energy, a transaction still awaiting approval by the federal government.
The minister explained that output from the assets declined from 600,000 barrels per day (bpd) to the current 120,000bpd, leaving a shortfall of 480,000bpd, which he said amounted to $34 billion loss at a conservative $80 per barrels, in the last two and a half years.
He stated that if the problem hindering the divestment process was resolved and minimal investment made on the asset, the country would be able to restore production to 600,000bpd with the addition of 480,000bpd.
Reacting to the latest settlement agreement between NNPCL and ExxonMobil, Seplat Energies expressed excitement, saying the move is a positive development and big hurdle crossed in the transaction.
Director, External Affairs and Sustainability, Seplat Energy, Chioma Afe, told THISDAY by telephone that the next step was for the deal to be given regulatory approvals while the company continued its conversation with the NNPCL.
Afe stated, “Yes, they have signed the settlement agreement. It’s a positive development and just one hurdle that has been crossed. I think we are in the right direction towards finalising the deal. You do know that ExxonMobil met with the president yesterday (Wednesday) and his feedback was also quite positive.
“The fact that they’ve now signed the agreement to the divestment is a step in the right direction and a step that is positive. So, the process continues. We would still continue with the regulatory approval processes and also conversation with NNPC.”
ExxonMobil   in an email response sent to THISDAY, last night, by its Regional Communications Manager for Africa, Mr. Oge Udeagha, confirmed that it had reached an agreement with NNPCL to lift the injunction that prevented the sale of the Mobil Producing Nigeria Unlimited shares to Seplat.
“We have reached an agreement with NNPCL to lift the injunction that prevented the sale of the Mobil Producing Nigeria Unlimited shares to Seplat. We look forward to the injunction being lifted and working toward the conclusion of the sale.
“We appreciate the continued support and collaboration of President Bola Tinubu, the Minister of State for Petroleum, as well as the Group Chief Executive Officer of Nigeria National Petroleum Company Limited, on this transaction”, ExxonMobil said.
The agreement involves the acquisition of the entire share capital of MPNU from Exxon Mobil Corporation, Delaware (ExxonMobil).
The first transaction to be announced at the time under the Petroleum Industry Act (PIA), aside the purchase price of $1.283 billion, it was also supposed to involve a $300 million contingent consideration.
The transaction encompasses the acquisition of the entire offshore shallow water business of ExxonMobil in Nigeria to deliver 186 per cent increase in production from 51,000 bpd to 146,000 bpd, 14 per cent increase in 2P gas reserves from 1,501 billion standard cubic feet (Bscf) to 1,712 Bscf, plus significant undeveloped gas potential of 2,910 Bscf, Seplat said at the time.
It would increase production by 89 per cent in total 2P reserves from 499 million barrels of oil equivalent (mmboe) to 945 mmboe and includes offshore fields with dedicated, MPNU-operated export routes offering enhanced security and reliability. 2P reserves are the total of proven and probable reserves.
The deal primarily comprises 40 per cent operating ownership of four oil mining leases (OMLs 67, 68, 70, 104) and associated infrastructure, with NNPCL as the 60 per cent partner.
It also includes the Qua Iboe Terminal, 51 per cent interest in Bonny River Terminal, and Natural Gas Liquids Recovery Plants at EAP and Oso.