The Nigerian Upstream Petroleum Regulatory Commission, NUPRC, said on Monday, that the acquisition of Nigerian Agip Oil Company, NAOC Limited, by Oando Plc owned by Wale Tinubu followed due process.
NUPRC said the clarification was necessitated by the public interest that trailed the deal.
A former vice president, Atiku Abubakar, had recently asked the federal government to explain why Oando Plc, “owned by the president’s nephew”, received accelerated approval to buy the onshore assets of Agip and Eni while other transactions — such as the Shell/Renaissance and the Mobil/Seplat deals suffered delays.
Oando Plc had on September 4, 2023, said it had reached an agreement with Eni, an Italian oil major, on the acquisition of a 100 percent stake in its subsidiary-Agip.
On July 24, Eni said it received regulatory approval from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for the sale of the NAOC Ltd to Oando.
Oando said on August 22, it has completed the acquisition of Eni’s 100 percent shareholding in the NAOC for $783 million.
Reacting to the development in a statement on Sunday by Phrank Shaibu, Abubakar’s special assistant on public communication, the former vice-president said Oando was being given “undue and preferential treatment in the oil and gas sector to the detriment of more competent investors”.
However, NUPRC In a statement on Monday, August 26, signed by the Head of its Public Affairs Unit, Mrs. Olaide Shonola, gave details on how the deal was sealed, as well as other divestments.
Full text of the statement:
“In line with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC)’s avowed commitment to transparency and belief in the right of the public to know about our regulatory activities, we wish to keep the public abreast of the status of certain divestments that have received ministerial consent and the divestment by Mobil Producing Nigeria Unlimited (MPNU), which has been subject to a lot of public attention.
As the public may be aware, ministerial approval was recently granted to the divestment by NAOC to Oando Petroleum and Natural Gas Company Limited (Oando PNGCL) and OANDO Oil II Cooperatief U.A. (OANDO Cooperatief) (together the “Oando Entities”) and by Equinor Nigeria to Chappal Energies.
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 divestment by MPNU to Seplat Energy Offshore Limited (Seplat) is also currently undergoing the same consent approval process and is expected to be completed within the 120-day timeline provided by the PIA.
Perhaps it would be necessary to give a further breakdown of the processes that saw the divestment of assets by NAOC to the OANDO Entities as an example and the divestment of shares in Mobil Producing Nigeria Unlimited (MPNU) to Seplat.
To be sure, the consent to Oando and Chappal Energies were fulfilled according to the regulatory process.
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 by a letter dated May 21, 2023, requested NAOC to provide information on the proposed assignee. 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 and submitted OANDO PNGCL and OANDO Coöperatief as qualified companies for the consideration of the Commission.
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.
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 Equinor-Chappal divestment followed the same regulatory process as for the NAOC-Oando transaction. On a comparative basis, MPNU through a letter dated February 24, 2022, notified the Commission of its intention to assign 100% of its issued shares to Seplat Offshore Energy Limited. 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 Nigerian Upstream Petroleum Regulatory Commission.
In June 2024, NNPC and MPNU resolved their dispute with NNPC, and MPNU, by letter dated 26 June 2024 informed 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 18 July 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-daytimeline required by the PIA.
Given the above, the Commission wishes to assure the public that the process for approving divestment applications is guided by the provisions of the PIA and clearly defined frameworks in the assignment regulations, guided by international best practices.
NUPRC, as an organisation guided by law and professionalism, will continue to pursue its statutory mandate in a legal, independent, technical, commercial, and professional manner, operating under the authority of the PIA”.
