ExxonMobil is seeking approval from the Nigerian government to proceed with the sale of its shallow-water oil production operations in Nigeria. The deal has been delayed since August 2022. Even so, the company has decided to retain its deep-water assets in Nigeria.
Recall that in early 2022, Exxonmobil agreed to sell its shallow-water assets in Nigeria to Seplat Energy for $1.28 billion, with an additional contingent consideration of $300 million. The sale, however, faced various regulatory obstacles. The CEO of the Nigerian Upstream Petroleum Commission (NUPRC) noted that, under the Petroleum Industry Act, only the petroleum minister could authorize approval for such an acquisition upon receiving a recommendation from the commission.
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The NUPRC did not explain the delay in the agreement and mentioned,
“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.”
Before the start of the CERAweek Energy Conference organized by S&P Global in Houston on Monday, a senior executive from Exxon noted that the company was lobbying the Nigerian government to authorize the assets’ sale. Also, Seplat Energy Plc, the acquirer, has pointed out that they are collaborating with the government to secure the necessary approval for the transaction before the new President’s inauguration in two months.
The Exxon Global Upstream President Liam Mallon noted that Nigeria “remains a challenging place to work in”. And according to him, Exxon made “a clear commitment” to remain active in Nigeria via its deep-water activities. Still, any future investments would be contingent on market circumstances.
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According to Mallon, “The deep water in Nigeria remains an attractive opportunity, but it has to compete with other opportunities around the world.”
About the Deal
Seplat entered an agreement to acquire a 40% operating stake in four oil leases owned by Mobil Producing Nigeria Unlimited in February 2022. The deal would result in an almost threefold increase in Seplat’s annual net production to 146,000 barrels of oil equivalent per day (BOE/D). As part of the agreement, Seplat will acquire the Qua Iboe export terminal, a 51% stake in the Bonny River Terminal, and natural gas liquids recovery plants at EAP and Oso.
While Buhari consented to the deal in August, the NUPRC, Nigeria’s upstream regulatory body, declined to assent to the agreement, thus keeping the transaction in limbo since 2022.
With the presidential elections concluded last month and the country poised to welcome a new President, the oil companies anticipate proceeding with the agreement either before or after the incoming President’s inauguration.
