Nigeria has formally authorized the $1.28 billion agreement between Seplat Energy and ExxonMobil, marking a crucial milestone after a two-year wait. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) issued this ruling on October 21, 2024, allowing Seplat to buy ExxonMobil's onshore assets in Nigeria, particularly its offshore shallow water activities.
The transaction was first suggested in February 2022, when Seplat announced aspirations to acquire Mobil Producing Nigeria Unlimited from ExxonMobil. However, issues developed when the Nigerian National Petroleum Corporation (NNPC) used its Right of First Refusal (RFR), as stated in their Joint Operating Agreement.
This resulted in the federal government halting the sale in May 2022, claiming overwhelming national interests.In July 2022, an Abuja court imposed an injunction barring ExxonMobil from completing any divestments connected to its Nigerian businesses. The situation remained tight until July 2024, when the NNPC dropped its case, paving the way for final clearance under the Petroleum Industry Act (PIA).
In his Independence Day speech, President Bola Tinubu reiterated the government's commitment to promoting free business and upholding regulatory integrity. He noted that the clearance is consistent with the ideals of the PIA and seeks to increase investment attractiveness in Nigeria's oil industry.Tinubu commented,
"This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing fortunes positively." The clearance is seen as a significant step in reviving Nigeria's oil output and attracting international investment.
The Seplat-ExxonMobil agreement reflects a larger trend of multinational oil firms (IOCs) withdrawing from onshore operations in Nigeria. Shell Plc recently made a same step, selling its Nigerian onshore assets for more than $1.3 billion to a local group.
TotalEnergies is also contemplating selling its minority position in a major Nigerian onshore joint venture.These divestments are part of a strategy change by IOCs to concentrate more on offshore operations and optimize their portfolios in the face of volatile oil prices and regulatory hurdles.
The Seplat-ExxonMobil merger is anticipated to be completed within the PIA's 120-day timetable. Analysts think that this acquisition would not only improve Seplat's operating capabilities, but will also considerably help Nigeria's oil production recovery efforts.
With Nigeria straining to achieve its OPEC output requirements, this pact might benefit the country's economy and energy industry. It emphasizes the significance of legal frameworks that might promote simpler transactions between local businesses and foreign oil majors.
The clearance of the $1.28 billion Seplat-ExxonMobil transaction is a watershed event for Nigeria's oil sector, after years of regulatory and legal problems.
As the government works to resuscitate its oil industry, this deal might serve as a model for future investments and collaborations in Nigeria's energy environment.
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