FG approves ExxonMobil’s $1.28 billion asset sale to Seplat after two-year delay

The federal government has approved the sale of ExxonMobil’s onshore assets to Seplat Energy, more than two years after the $1.28 billion deal was initially agreed.

The CEO of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, confirmed this to Reuters on Monday in Abuja.

The sale, first announced in February 2022, had been delayed pending regulatory approval.

However, President Bola Tinubu on October 1 assured that the transaction would receive ministerial approval within days, following clearance from the regulator.

“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes.   

“This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively.  

“As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector,” Tinubu said. 

Backstory 

On February 25, 2022, Seplat Energy Plc announced its plan to acquire all shares of Mobil Producing Nigeria Unlimited from ExxonMobil Corporation, Delaware, for $1.28 billion.

• The deal involved taking over ExxonMobil Nigeria’s offshore shallow water operations. However, the Nigerian National Petroleum Corporation (NNPC) exercised its Right of First Refusal (RFR) regarding the sale of these assets.
• This RFR, outlined in the Joint Operating Agreement (JOA) of the Joint Venture (JV), reflected NNPC’s position on Seplat Energy Plc’s planned acquisition.
• In May 2022, the federal government declined to approve the transaction, citing overriding national interest among other reasons. 
• Additionally, on July 6, 2022, a judge in Abuja issued an interim injunction preventing ExxonMobil from completing any divestment of a subsidiary holding four licenses in Nigeria.
• However, by July 2024, NNPC withdrew the lawsuit and granted approval for the sale to proceed in line with the Petroleum Industry Act (PIA).

What You Should Know  

• ExxonMobil is not the only international oil company (IOC) adopting an offshore-focused divestment strategy to exit Nigeria’s onshore oil and gas sector.
• In January 2024, Shell Plc reached an agreement to sell its onshore oil assets in Nigeria to a local consortium for over $1.3 billion, pending government approval.
• Beyond the initial amount, Shell expects additional payments of up to $1.1 billion. The consortium, named Renaissance, includes ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin.
• Similarly, TotalEnergies announced plans to sell its minority stake in a major Nigerian onshore oil joint venture, following Shell’s divestment decision.

Cover photo: By Nairametrics