The head of Nigeria’s oil regulator expressed strong optimism that the stalled $1.28 billion asset sale by oil major Exxon Mobil to Seplat Energy will move forward, following a previous regulatory refusal to approve the transaction.
“We are very optimistic that parties to the transaction will go back, look at the position of the regulator and come back by abiding by the provisions of Nigerian laws, and the right thing will be done,” stated Gbenga Komolafe, the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), during an African energy conference, as reported by Reuters.
The proposed sale, which was declined by the regulator last year, is widely seen as crucial for attracting much-needed investment into Nigeria’s oil and gas sector, which has faced years of underinvestment and theft leading to a decline in production.
Komolafe elaborated that Exxon had not adhered to the provisions of its joint operating agreement in the initial transaction proposal. However, he indicated that if Exxon successfully established proper agreements with its joint-venture partners involved in the assets, the regulator would be ready to proceed.
Notably, the state-owned oil company NNPC (Nigerian National Petroleum Corporation) had also contested the sale, arguing that it had pre-emptive rights to the assets in question. NNPC, however, has not made any public statements regarding whether it had made an offer to purchase these assets.
Nigeria, as Africa’s largest oil exporter, is highly dependent on petroleum, with the sector contributing to 90% of the country’s foreign exchange and half of its budget. Despite the nation’s substantial oil reserves, years of underinvestment, security challenges, and regulatory issues have led to a significant decline in oil production.
The difficulties faced in onshore asset sales are not unique to Exxon. Several international oil majors operating in Nigeria have encountered legal and regulatory obstacles in their attempts to divest onshore assets.
In a related instance, the Nigerian National Petroleum Corporation recently criticized a subsidiary of Italy’s Eni for not obtaining consent before announcing a deal to sell onshore oil assets to local company Oando. This lack of consent raised concerns about the potential breach of the terms outlined in their joint operating agreement.
The optimism expressed by the Nigerian oil regulator regarding the Exxon Mobil asset sale signals a renewed hope for the transaction, which has the potential to attract investments and revitalize the Nigerian oil and gas sector, playing a crucial role in Nigeria’s economic stability and growth.