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Analysts Link Seplat’s Acquisition Of Mobil Saga To PIA Flaws

As the controversies over Seplat Energy Plc’s intention to acquire assets of Mobil Producing Nigeria Unlimited (MPNU) rage on amid serious concerns among investment and legal experts, Proshare Limited’s analysts have linked the confusions over the process to flaws in the just enacted Petroleum Industry Act (PIA) 2021.

The investment research and consulting services’ analysts in a Note issued titled ‘Look Beyond the Seplat-Mobil Acquisition Deadlock’ noted that the provision of the PIA 2021 requires that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) shall have the power to renew and suspend licenses and leases with the approval of the petroleum minister.

The analysts were of the view that the opposition to the Seplat-ExxonMobil shallow offshore deal by the NUPRC raises concerns as to the (clarity) intent and the endgame of the PIA.

The experts pointed out beyond the in-fighting on the Seplat acquisition of the entire stake of MPNU (valued at US$1.3bn plus $300m contingent consideration), and expressed concern about a few deeper issues/questions that demand urgent resolution.

They listed the issues requiring urgent resolution as including, the divestment of IOCs from the Nigerian oil market at a time the country needs FDI; has the issue of abandonment and decommissioning of the assets by ExxonMobil been resolved before the approval; and what are the implications of unclear governance framework on future investment flow to the industry.

Others are who is seeking to exercise the Right of First Refusal on the Seplat-ExxonMobil deal again when the legacy NNPC is no longer a public corporation that is holding stakes in trust for Nigerians (since not all assets and liabilities of the NNPC is automatically transferred to the New NNPC Limited); and how best can the country resolve the 400,000 b/d oil production shortfalls/theft as claimed by the Minister of State for Petroleum Resources.

It would be recalled that since Monday when the Nigerian energy company announced the approval given by President Mohammadu Buhari validating its cash acquisition of the MPNU assets, the public had been fed with contradictory claims by the NUPRC and the Minister of Petroleum Resources over the president’s purported approval.

For instance, while the minister, who was quoted by Seplat Energy’s management as conveying the approval by the president of the acquisition of the MPNU to the company, the NUPRC’s CEO, Mr. Gbenga Komolafe, on Tuesday in a statement described the purported approval as untrue.

The NUPRC’s CEO in a statement, titled ‘Status Quo Remains on Share Sale By ExxonMobil to Seplat Energy’, stated: “The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) affirms that status quo remains in respect of ExxonMobil/Seplat Energy share acquisition.

“The Commission, in line with the provisions of the Petroleum Industry Act 2021, is the sole regulator in dealing with such matters in the Nigerian upstream sector.

“As it were, the issue at stake is purely a regulatory matter, and the Commission had earlier communicated the decline of Ministerial assent to ExxonMobil in this regard. As such the Commission further affirms that the status quo remains.

“The Commission is committed to ensuring predictable and conducive regulatory environment at all times in the Nigerian”, the NUPRC boss stressed.

However, Sylva, while reacting to media enquiries on the NUPRC’s latest position on the deal, maintained he was not aware of the NUPRC counter-order over an issue the President has already given approval.

The minister said: “If the President has already approved a transaction in his capacity as the Minister of Petroleum Resources as stipulated by law, it is not the place of the NUPRC to go to the press in whatever capacity to issue a counter statement without clearance.

“If the NUPRC has a counter approval from the President, it will be understandable. But at this moment, there is no such approval.

“It is very sad that the NUPRC would be issuing a statement on the issue without asking questions with supervising ministry. This is unbecoming and embarrassing to controvert the President in that way over a matter he has already given approval”, Sylva added.

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