By Enyichukwu Enemanna
The last has not been heard about the acquisition of ExxonMobil’s shares by Seplat Energy, an indigenous oil company which got a ministerial nod on Monday, following a statement from the presidency announcing President Muhammadu Buhari’s approval in his capacity as the minister of Petroleum Resources.
This deal is however about hitting the rocks as the country’s Upstream regulator, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has rejected the presidential approval.
NUPRC’s position which is contained in a statement signed by its chief executive, Gbenga Komolafe, is in contradiction to the presidency’s earlier statement released by Mr. Femi Adesina, Special Assistant on Media and Publicity to President Buhari.
Mr Adesina said Mr Buhari approved the transfer in his capacity as Minister of Petroleum Resources and the approval was in consonance with the country’s drive for Foreign Direct Investment in the energy sector and considering the “extensive benefits of the transaction to the Nigerian Energy sector and the larger economy.”
However, NUPRC on Monday night said the matter was a regulatory one and nothing had changed after it had earlier notified ExxonMobil the deal had been nullified.
Backstory
Exxon Mobil entered into a landmark Sale and Purchase Agreement with Seplat Energy to acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Mobil Development Nigeria Inc, and Mobil Exploration Nigeria Inc. earlier this year.
But the deal was subject to Ministerial Consent and other required regulatory approvals.
The deal suffered a setback after the state-owned Nigerian National Petroleum Corporation Limited asserted a right of first refusal on the deal.
As a joint venture partner, NNPC argued it retained the right to be allowed to buy oil blocks sold by ExxonMobil ahead of any competitor or private firm.
Heritage Times (HT) gathered that President Buhari had last week declined Seplat Energy’s bid in favour of NNPC, only for a contradictory statement to be released on Monday.
What the NUPRC is saying
Responding to media enquiries on the latest development about the deal, the Chief Executive of the NUPRC clarified that the Commission in line with the provisions of the Petroleum Industry Act 2021 is the sole regulator in dealing with such matters in the Nigerian upstream sector.
“The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) affirms that status quo remains in respect of ExxonMobil/Seplat Energy share acquisition.
“As it were, the issue at stake is purely a regulatory matter and the Commission had earlier communicated the decline of Ministerial assent to ExxonMobil in this regard. As such the Commission further affirms that the status quo remains,” Komolafe stated.
NUPRC makes a strong case
Quoting relevant sections of the law which empower it to wield such influence, Komolafe in a television appearance on Tuesday stated that the status quo (its withdrawal of consent) still holds.
“Let me just put it simply, as a commission, we work strictly in line with the position of the law, and basically we don’t react on the basis of news making the rounds, but we work strictly in line with the law.
“And by virtue of the provisions of the petroleum industry act, under section 95, subsection 10, 14 and 15, the commission’s powers in these regards are clearly stated.
“So, regarding the issue, you have raised, my clarification will just be an affirmation that the position of the commission stands in respect of the decline of the assets (sale), without prejudice to any other position.
“So, the position of the commission as the authority involved in the regulation of the upstream which had earlier been communicated to Mobil, stands. As far as the commission is concerned, nothing has changed. The status quo remains as far as we are concerned,” he maintained.
What the relevant laws say
Section 95, sub-section 10 states mentioned by Komolafe states, “Where the application for an assignment or a transfer of a petroleum prospecting licence of petroleum mining lease is refused, the commission shall inform the applicant of the reasons for the refusal and may give reasonable time within which further representations may be made by the applicant or by third parties in respect of the application.”
The sub-section 14 of same section 95, the PIA states: “For the purpose of this section, change of control means any person or persons acting jointly or in concert, to acquire direct or indirect beneficial ownership of a percentage of the voting power of the outstanding voting securities of the holder, by contract or otherwise, that exceeds 50 per cent at any time.”
It continued in sub-section 15 thus: “A holder of a petroleum exploration licence shall not assign, novate or transfer his licence or any right, power or interest without the prior written consent of the commission.”
Also, Section 95, sub-section 8 states: “Where the consent of the minister is granted in respect of the application for a transfer, the Commission shall promptly record the transfer in the appropriate register.”
Sub-section 9: “The Commission shall communicate the refusal or approval of an application for an assignment, novation or transfer of a licence or lease in writing to the applicant.”
In approving the deal, President Buhari cited the Petroleum Act of 1969 which was a basis for its own “Ministers” consent. However, the NUPRC cited the PIA as the source of its own powers suggesting that the PIA was the reference act for the transaction.
Analysts, legal practitioners kick, say President’s decision overrides national interest
Heritage Times (HT) gathered that President Buhari had last week declined Seplat Energy’s bid in favour of NNPC, only for a contradictory statement to be released on Monday.
Analysts said the opposing decisions suggest the president may not be in full control of critical state matters and powerful interests sometimes work through aides to obtain favourable, even if controversial, decisions.
They questioned why the president would hand the oil asset to a private firm when the government has just recently commercialised the NNPC, making the former regulator an operator and competitor in the industry.
Although some legal practitioners who have commented on the development said the Presidency may have been correct as the PIA mostly addresses oil-producing licenses while oil mining licenses rely on the Petroleum Act of 1969, many others argued that the development brings to the fore the deficiencies of the PIA as it allows for several interpretations which are often exploited by players in the sector depending on which one suits their needs.
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