NNPC Subsidiary Raises Questions Over Agip-Oando Assets Sale Deal

The Nigerian National Petroleum Company Limited (NNPC) Exploration and Production Limited (NEPL), a subsidiary of the national oil company, has raised questions over an ongoing agreement for the 100 per cent planned purchase of Agip’s onshore oil, gas and power assets by Oando Oil Limited.

In a letter addressed to Nigeria Agip Oil Company (NAOC) obtained by THISDAYon Wednesday, the NNPC exploration and production unit maintained that it had not been informed that the transaction was in the offing.

However, commenting on the letter by NEPL in respect of the deal, a source who preferred to remain anonymous said: “I find it shocking that the minders of our national wealth display such little intelligence.  The company NAOC sold its shares. It did not assign any interest in the JV or the JOA. Corporate law establishes the company as a legal being. Shareholders can change at any time.

“The PIA however says that when there is a change in control of a company that has interest in a lease you require the consent of the Minister. These chaps in NNPC should know this. The announcements clearly state that NAOC has sold its shares to Oando. There is very little, if any NNPC can do. We just continue to display to the international community how naive we are by these kinds of statements from NNPC who should know better.”

But describing the deal as ‘purported’, the NEPL stated that once it was made aware of the agreement between Agip and Oando, it would then know the next steps to take.

When THISDAY contacted NNPC’s Chief Corporate Communications Officer, Garba Muhammad, he noted that the letter was neither an objection to the deal nor an attempt to block it, but to ensure that legal issues do not arise in the future.

“The letter was sent by NEPL, an NNPC Ltd subsidiary. But please note that it is not an objection to the transaction.

“NEPL is only drawing attention to certain important clauses in the Joint Operating Agreement (JOA), which might have been overlooked in error. Adherence to those clauses will protect the transaction now and in the future,” he said, while confirming the authenticity of the letter.

It was earlier reported that NAOC, a subsidiary of Italian energy group Eni, which has interests in four onshore blocks and two onshore exploration leases as well as two power plants in Nigeria, was planning to buy Agip assets in the country. The agreement was, however, still subject to regulatory approval, the company said.

Apart from Oil Mining Leases (OML) 60, 61, 62, 63, NAOC also has interests in the Okpai 1 and 2 power plants with a total nameplate capacity of 960 megawatts as well as in two Onshore Exploration Leases (OPL) 282 and 135, for which it also holds operatorship.

THISDAY, however, recalls that the NNPC recently objected to the Seplat-Mobil deal, noting that it had the right of first refusal, according to the extant JOA. It is believed that the current case may be headed in the same direction.

In the official communication sent by NEPL signed by the Managing Director of the NNPC exploration company, Muhammed Zarah, the NNPC subsidiary noted that if confirmed true, the deal will be a breach of the existing JOA among the concerned parties.

“Our attention has been drawn to various reports circulating on different media platforms in relation to an alleged divestment of NAOC’s participating interest in OMLs 60, 61, 62 and 63 to Oando Oil Limited.

“A duly signed press statement allegedly emanating from OOL dated 4th September 2023 affirms the fact that NAOC has assigned its entire 20 per cent participating interest in the said OMLs to OOL.

“Whilst we are yet to confirm the authenticity of the said divestment, we would like to note that the purported assignment, if true, would have the following far-reaching contractual/legal implications in relation to the JOA dated July 1991 governing the operations of the NAOC/NEPL/OOL Joint Venture (JV),” NEPL said.

It reiterated that Clause 19.1.1 of the JOA provides that: “The party may assign or transfer its interest or any part thereof without the prior written consent of the other parties, which consent shall not be unreasonably withheld’’.

By virtue of the provision, a party seeking to transfer part or the whole of its participating interest in the JV, Zarah said, is obligated to seek the prior written consent of the other parties.

“In this instance, NAOC did not inform NEPL of any proposed assignment of its participating interest to OOL or any other party neither, did NAOC seek and obtain the mandatory pre-divestment written consent and approval from NEPL in accordance with Clause 19.1.1. of the JOA.

“It is imperative for you to note that failure to obtain NEPL’s prior written consent and approval with regards to the alleged transfer of your interests in the joint assets constitutes a grave breach of the terms of the JOA and NEPL reserves its rights in relation to the said breach, including NEPL’s entitlement to invalidate the purported assignment to OOL.

“Under the terms of the JOA, assignment of interest has implications on the transfer of operatorship. Clause 2.4.1(i)(c) of the JOA provides that the operator shall cease to be operator and shall be removed by the non-operators if the operator assigns or otherwise disposes of, other than to an affiliate, all its participating interest.

“Furthermore, Clause 2.6.1 provides that in the event of cessation of operatorship arising from the above circumstance, the parties shall appoint one of the non-operators as successor operator,” it held.

The NEPL said it had highlighted the above provisions of the JOA to underscore the point that the ‘purported’ assignment, even if valid, should by no means translate to transfer of operatorship to Oando.

It explained that if NAOC’s divestment turns out to be valid, it will become incumbent on NEPL and Oando to decide on a successor operator.

“Please note that as holders of 60 per cent participating interest in the NEPL/NAOC/OOL JV, we are indeed concerned that the entire purported assignment was executed without due compliance with the terms of the JOA.

“We expect that all parties to the JOA will observe and comply with the terms of the JOA.

“In view of the foregoing, we request NAOC’s confirmation to NEPL, the authenticity or otherwise of the reported divestment to enable us to determine our next steps with regards to the management/operations of the assets,” the document stated.

When THISDAY contacted the General Manager, Business Support Group, Oando Energy Resources, Alero Balogun, she noted that the letter was directed at NAOC, and thus, it was unable to comment on it.

“However, we trust that, as requested by NEPL, NAOC will engage accordingly to ensure that their concerns are addressed.

“In the meantime, we would like to reiterate that Eni has not assigned its 20 per cent interest in the NAOC JV to Oando PLC.

“The statements Oando and Eni put out spoke to the signing of a sales and purchase agreement for the purchase of 100 per cent of the shares of NAOC Ltd by Oando subject to the fulfilment of conditions precedent, including receipt of all relevant regulatory and partner approvals,” Oando explained.

Oando added that it had earlier highlighted clearly that the transaction was subject to ministerial and all regulatory approvals.

Meanwhile, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has shut down the Brass crude oil export terminal in protest against the plans by Italian energy group, Eni to sell NAOC, its local subsidiary to Oando Plc.

The oil workers, who expressed displeasure over the sale of Agip’s oil, gas and power assets without prior consultation with them, had demanded that Eni put the sale on hold until they had been properly consulted and terms for transfer of services agreed.

The shutdown of the Brass crude terminal and other NAOC assets started on Tuesday, according to PENGASSAN sources.

“NAOC management only told workers about the sale on September 4, the day the deal was made public, having denied plans for any such sale when worker representatives asked at a meeting in July”, PENGASSAN said.

Besides the Brass terminal, the joint venture operates four onshore oil blocks in the Niger delta, two onshore exploration leases, 12 flow stations, three gas processing plants and two power plants. NAOC also has a five per cent  interest in the Shell-operated SPDC joint venture in Nigeria, which is not included in the sale.

The Brass terminal received 24,000 barrels of crude on  September 4. Receipts averaged 27,000 bpd last month. The last tanker to load there, the Seavision, departed for Italy with a 349,000bl cargo on  August 22, Argus Media reported.

Oando acquired its 20 per cent stake in the NAOC joint venture when it bought US firm ConocoPhillips’ Nigerian business for $1.5 billion in 2014.

Buying NAOC from Eni will lift Oando’s interest in the joint venture to 40 per cent and increase its reserves by 98 per cent.

Oando, which started the process of delisting from the Nigerian and South African stock exchanges in March, said completion of the NAOC deal was pending ministerial consent and regulatory approvals.

Argus media quoted NAOC to have stated that it remained committed to the health and safety of its employees but declined to comment on the workers’ demands.

Emmanuel Addeh and Peter Uzoho

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