NUPRC: Oando-NAOC Deal Followed Due Process, Complied with Extant Rules

•Says NNPC, Mobil court case delayed agreement, transaction undergoing due diligence

Emmanuel Addeh in Abuja

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) yesterday said the approval of the divestment deal between Oando and Nigerian Agip Oil Company (NAOC) followed due process and was done in compliance with existing regulations.

A statement by the Head, Public Affairs Unit of the upstream regulatory body, Olaide Shonola, stated that the explanation became necessary because of NUPRC’s avowed commitment to transparency and belief in the right of the public to know about its regulatory activities.

Recall that former Vice President, Abubakar Atiku, had raised some posers over the $783 million acquisition, alleging that the deal was unduly accelerated as a result of the relationship between the Chief Executive Officer of the indigenous oil firm, Wale and President Bola Tinubu.

 “The commission wishes the public to be aware that the approvals given to the NAOC-Oando and Equinor – Chappal divestments were in accordance with the Petroleum Industry Act (PIA) 2021, defined regulatory framework, and standard consent approval process set by the Commission under the PIA,” the NUPRC stated.

As for the divestment by Mobil Producing Nigeria Unlimited (MPNU) to Seplat Energy Offshore Limited (Seplat), which Atiku said was being unduly delayed, the statement noted that it is also currently undergoing the same consent approval process and is expected to be completed within the 120-day timeline provided by the PIA.

“Furthermore, the commission’s thorough evaluation and due diligence process, anchored on the seven pillars of the divestment framework, ensured that potential assignees were capable and compliant with legal requirements and that all legacy liabilities were identified and appropriately managed.

“The commission subsequently made recommendations to the Honourable Minister of Petroleum Resources based on comprehensive assessments which covered the timeline for review of application under the PIA and the commission’s regulatory process,” the upstream regulator pointed out.

On a comparative basis, it said that MPNU through a letter dated February 24, 2022, notified the commission of its intention to assign 100 per cent of its issued shares to Seplat Offshore Energy Limited.

It said the commission did not consent to this assignment because MPNU failed to obtain a waiver of pre-emption rights as well as the consent of NNPC, its partner on the blocks to the divestment.

“It is worth pointing out that NNPC’s right to pre-emption and consent under the NNPCL/MPNU Joint Venture Joint Operating Agreement was the subject of Suit No: FCT/HC/BW/173/2022 Nigerian National Petroleum Company Limited versus Mobil Producing Nigeria Unlimited, Mobil Development Nigeria Inc., Mobil Exploration Nigeria Inc. and NUPRC,” it added.

But in June 2024, NNPC and MPNU, the commission said, resolved their dispute through a letter dated  June 26, 2024, informing the commission of the resolution of the dispute.

“Upon resolution of this dispute, the commission communicated its no-objection  decision to the assignment via a letter dated July 4, 2024 and requested MPNU to provide information and documentation required under the commission’s due diligence checklist to enable the commission conduct its due diligence as required under the PIA.

“MPNU by letter dated July 18, 2024 provided the information requested by the commission. Accordingly, MPNU’s application to the commission for consent is currently undergoing due diligence review, under the same divestment framework applied to the NAOC-Oando and Equinor-Chappal divestment.

“The commission’s due diligence process is ongoing and within the 120-day timeline required by the PIA,” it added.

Specifically, Atiku had said that Oando was given undue and preferential treatment in the oil and gas sector to the detriment of more competent investors.

“Within just eight months, the NUPRC approved a deal which saw the divestment of ENI/AGIP onshore assets to Oando. Within that same period, Nigeria controversially withdrew all litigation against Shell/ENI in the OPL 245 scandal in what has been described as a quid pro quo.

“However, the attempt by Seplat to buy Mobil’s onshore assets has continued to stall for the last three years even as the consent letter remains on Tinubu’s table,” Atiku had further alleged.

But the NUPRC which gave a blow-by-blow account of how far the process had gone, said that in respect of the NAOC divestment, NAOC by a letter of May 16, 2023, notified the commission of its intention to proceed with the divestment of participating interests in some of its oil and gas assets.

The commission added that by a letter dated May 21, 2023, it  requested NAOC to provide information on the proposed assignee, noting that NAOC by another letter dated July 24, 2023, notified the commission that it had completed the technical evaluation of the companies shortlisted for the proposed transaction.

“The commission by a letter dated August 9, 2023, granted approval to NAOC to proceed to the commercial stage of the transaction. Consequently, NAOC, vide a letter of November 7, 2023, made a formal application requesting the consent of the Minister of Petroleum Resources to the NAOC divestment.

“In line with its processes, the commission by a letter dated December 14, 2023, requested the information contained in the commission’s due diligence checklist on the transaction and NAOC by a letter dated January 10, 2024, provided the information requested via the Commission’s letter dated December 14, 2023.

“Consequently, the process was conducted in compliance with the requirements of relevant legislations, regulations and guidelines including the Petroleum Act, Petroleum Industry Act, Petroleum Drilling and Production Regulations, and the Upstream Asset Divestment and Exit Guidance Framework.

“The divestment framework evaluated the divestments based on Technical Capacity, Financial Viability, Legal Compliance, Decommissioning and Abandonment, Host Community Trust and Environmental Remediation, Industrial Relations and Labour Issues, as well as Data Repatriation.

“Additionally, NAOC obtained a waiver of pre-emption and consent to the divestment from NNPC, their partner on the blocks. To ensure due diligence, the commission, working with reputable external consultants identified significant pre-sale liabilities inherent in the assets to be divested by NAOC and proactively devised measures to ensure that the identified liabilities are adequately provided for,” the commission stated.

Given the above, the Gbenga Komolafe-led commission assured the public that the process for approving divestment applications was guided by the provisions of the PIA and clearly defined frameworks in the assignment regulations as well as by international best practices.