The Nigerian National Petroleum Company Limited and ExxonMobil have made progress in resolving the dispute over the sale of ExxonMobil’s asset to Seplat Energy, potentially leading to Nigeria increasing its daily crude oil output by 480,000 barrels.
The NNPCL officially announced on Thursday that it has reached a settlement agreement with ExxonMobil companies operating in Nigeria regarding the planned transfer of a full stake in Mobil Producing Nigeria Unlimited to Seplat Energy Offshore Limited, according to The Punch.
This follows President Bola Tinubu’s intervention in the fallout between NNPCL and ExxonMobil impeding the sale of the assets to Seplat.
Recently, the Minister of States for Petroleum, Heineken Lokpobiri stated that Nigeria had suffered a loss of approximately $30 billion in the last two and a half years due to the failed divestment.
The minister voiced worries about Nigeria’s daily loss of approximately 480,000 barrels of crude oil as a result of the Seplat/ExxonMobil fiasco.
He noted that before the crisis in 2022, the asset produced about 600,000bpd, adding the nation was losing millions of dollars daily.
In 2022, ExxonMobil and Seplat Energy revealed a sales agreement worth $1.6 billion. This deal involves Seplat buying all of ExxonMobil’s shares in the NNPCL.
However, However, in a letter dated May 16, 2022, by the Nigerian Upstream Petroleum Regulatory Commission to ExxonMobil, called off the deal stating that NNPCL had exercised its right of pre-emption first refusal on the assets.
Right of pre-emption is a legal right to parties in a joint venture to be the first to be considered for any planned sale or takeover of assets in the JVs if either party chooses to trade them off.
After approximately two years of legal battles, it appears that the crisis may finally be coming to a close.
The minister stated that the production of oil from the facility decreased to 120,000 barrels per day, which is a drop from 600,000 barrels per day since the disagreement started.
Lokpobiri said, “For the past two and a half years, oil has been hovering around $80 per barrel. 480,000bpd, multiply it by two and a half years, it will give you about $34bn. If one asset was doing about 600,000 barrels; but because of the problems which we are trying to resolve, production declined to 120,000 barrels, which means we’ve lost about 480,000bpd. Multiply it by $80, every day you get about $240m; multiply it by two and half years; we are talking of over $30bn. Inject that into our economy today, the dollar will naturally drop. This exchange rate is a matter of demand and supply.”
The energy company said, “Settlement agreement between NNPC Ltd. and Mobil Producing Nigeria Unlimited, Mobil Development Nigeria Inc., and Mobil Exploration Nigeria Inc. signed regarding the proposed divestment of a 100 per cent interest in Mobil Producing Nigeria Unlimited to Seplat Energy Offshore Limited”.
The sale of the asset to Seplat is expected to resolve the controversies and potentially increase Nigeria’s low oil production by about 480,000 barrels.
Seplat’s Director of External Affairs and Social Performance, Chioma Afe, described the development as a good step.
According to Afe, Seplat awaits final approvals, especially from the regulators.
“What Exxon and NNPC announced is a step in the right direction and it is a positive outcome,” Age stated.
She noted that as of Thursday, the company did not possess the specifics of the agreement and stated that she would be unable to comment on its importance.
“What I can speak to is what we can take from that statement, which is that it is a good step. This was one hurdle. We needed NNPC and ExxonMobil to come to the table to sign an agreement that we agreed to the divestment. Which is excellent,” she explained.
Afe disclosed that other things need to take place, including the regulatory approvals and final government stamp, saying“We are waiting on that”.
Commenting on the implication of the resolution, she said, “It will add to the number (of barrels) the country is seeking to be able to meet our OPEC number, that is more important; what it will contribute to the national number. It will contribute significantly to what the national output will be and that’s what we are very keen on.”
ExxonMobil has yet to reply to an inquiry sent by our correspondent as of press time.
