Indications are that there might be a looming crisis in the oil industry as the Nigerian National Petroleum Company Limited (NNPCL) has kicked against Oando’s agreement with ENI for the acquisition of its shares of Nigerian Agip Oil Company Limited (NAOC).
According to the national oil company, it is not sure of the transaction because it is in the dark about the said acquisition of the NAOC shares.
The company has therefore written the management of Nigerian Agip Oil Company Limited to ascertain the authenticity of the deal.
The reaction of the NNPCL follows the news of Oando’s acquisition of Nigerian Agip Oil Company Limited (NAOC) on Monday, Naija News reports
In a statement by the oil giant on Monday, Oando announced it had concluded plans to buy off the Nigerian exploration and production unit of Italian oil major Eni.
The consummation of the deal is subject to ministerial consent and other regulatory authorisations, and it also expands Oando’s exploration asset portfolio via the purchase of a 90 per cent stake in OPL 282 and a 48 per cent stake in OPL 135.
It will ramp up Oando’s current participating interests in OMLs 60, 61, 62 and 63 from 20 to 40 per cent.
“It increases Oando’s ownership stake in all NEPL/NAOC/OOL Joint Venture assets and infrastructure, which include forty discovered oil and gas fields, of which twenty-four are currently producing, approximately forty identified prospects and leads, twelve production stations, approximately 1,490 km of pipelines, three gas processing plants, the Brass River Oil Terminal, the KwaleOkpai phases 1 & 2 power plants (with a total nameplate capacity of 960 MW), and associated infrastructure.
”NAOC’s participating interest in Shell Production Development Company Joint Venture (operator Shell 30 per cent, TotalEnergies 10 per cent, NAOC 5 per cent, NNPC 55 per cent) is not part of the deal and so will be retained in Eni’s portfolio,” Oando said in the statement.
Meanwhile, NNPCL, in its letter reference E&P/MD/0523 dated 4 September, addressed to the Managing Director, Nigerian Agip Oil Company Limited and signed by the Managing Director, NNPC Exploration and Production Limited (NEPL), Ali Zarah, said there might be issues with the transaction if it’s authentic.
The national oil company, in the letter, said if indeed the transaction is authentic, there might be a legal issue because it would mean a breach of the Joint Operating Agreement (JOA) dated July 1991.
NNPCL explained that the agreement stipulates that before such a transaction can be held, without the knowledge of parties to the agreement, and NAOC did not inform NEPL of any proposed assignment.
The letter partly reads, “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 (OOL).
“A duly signed press statement allegedly emanating from OOL dated 4 September 2023 affirms the fact that NAOC has assigned its entire twenty (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 Joint Operating Agreement (JOA) dated July 1991 governing the operations of the NAOC/NEPL/OOL Joint Venture.”
The letter further explained that clause 19.1.1 of the J0A provides that “No 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 this provision, it said, a party seeking to transfer part or the whole of its participating interest in the Joint Venture is obligated to seek the prior written consent of the other parties.
But AOC 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 noted that under the terms of the JOA, assignment of interest has implications on the transfer of operatorship.
“It is imperative for you to note that failure to obtain NEPL’S prior written consent and approval with regard 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.
“Clause 24.1(i)(c) of the JOA provides that the operator shall the 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,” the letter reads.
Furthermore, it said, ”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 operators.
“We have 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 OOL If NAOC divestment turns out to be valid, it will become incumbent on NEPL and OOL to decide on a successor operator.
“Please note that as holders of sixty (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 regard to the management/operations of the assets.”
The post Crisis Looms As NNPCL Kicks Against Oando’s Acquisition Of Agip Oil, Writes Management appeared first on Naija News.