The Nigerian National Petroleum Company Limited (NNPCL) has clarified that its observation about the Eni SpA’s sale of a subsidiary to local producer Oando Plc is not an opposition to the deal but to ensure that all legal requirements are met in the transactions.
Eni had announced on September 4 its plan to sell to Oando one of its units that has a 20% operating stake in four onshore oil and gas blocks in the Niger Delta region.
However, the NNPCL in a statement by its spokesman, Garba Deen Muhammad, maintained that Eni’s failure to obtain NNPCL’s prior authorization for the sale ‘constitutes a grave breach’ of the contract governing the joint venture that holds the four permits.
Earlier in a letter to the Eni subsidiary, which was dated September 4, the Nigerian oil company, stated that it “reserves its rights in relation to the said breach” including an entitlement to invalidate the agreement
Apparently reacting to some new reports that the NNPCL was opposed to the deal, Muhammad stressed that the letter was “not an objection to the transaction,” but “only drawing attention to certain important clauses” in the joint venture agreement that “might have been overlooked in error,” and insisted that adherence to those clauses will protect the transaction now and in the future.
Oando had a 20% interest in the licences before the deal was agreed, while the NNPC holds a 60% stake.
But then, Eni insisted that it committed no breach of the joint venture agreement in selling the subsidiary to Oando, pointing out that while NNPCL has pre-emption rights, Eni had no obligation to inform the NNPCL in advance of the announcement.
In its statement issued on Thursday to clarify its position, Eni maintained: “Preemption procedures and other consents will be duly and carefully followed.”
Oando had on September 4 stated that completion of the transaction is subject to Ministerial consent and other regulatory approvals.
In the past few years, some international oil companies (IOCs) have been divesting from Nigeria’s onshore and shallow water blocks due to their challenging operating environment where infrastructure damage from crude theft had been a regular occurrence to local and international oil producers for years.
