By Derrick Bangura

The Nigerian National Petroleum Company (NNPC) Limited may have created a wedge in the highly acclaimed transaction that would have seen Seplat Energy, an indigenous oil firm, buy over oil shares belonging to ExxonMobil, THISDAY has learned.
The deal between ExxonMobil’s Nigerian unit, Mobil Oil Producing Nigeria Unlimited (MPNU), the first since the signing of the Petroleum Industry Act (PIA) in August last year, had attracted plaudits from industry leaders.
The Sale and Purchase Agreement (SPA) to acquire the entire share capital of MPNU, THISDAY had reported, was for a purchase price of $1.283 billion, plus up to $300 million contingent consideration.
However, a report by Platforms Africa, news, business, and leadership medium, stated that the state-owned oil giant had opted to exercise its Right of First Refusal (RFR) on the sale of the assets.
The RFR is reportedly contained in the Joint Operating Agreement (JOA) of the Joint Venture (JV), which represents NNPC’s position on the planned sale of the shares to Seplat Energy Plc.
Efforts to get NNPC to speak on the matter were not immediately fruitful, but a top source in the oil firm told THISDAY, “We will address it at the appropriate time.”
But an industry source who preferred to remain anonymous told THISDAY last night that NNPC’s action could lead to a legal tussle between Seplat and the national oil company. The source stressed that NNPC did not have the power to halt the acquisition of the multinational oil company’s shares by Seplat.
According to the source, “Seplat bought ExxonMobil’s shares, not assets. Whereas NNPC has right of pre-emption over the sale of assets, it does not have right over sale of shares.”
Furthermore, the source explained that with its present structure, NNPC was now a commercial entity and no longer a regulator, as it used to be in the past, “so, it is the regulator that can interfere in the matter.”
The source added, “However, they have to check the Production Sharing Contract (PSC) because if they say they are taking over ExxonMobil, that means they are taking over staff, pensions, and liabilities and not assets.”
It was gathered that NNPC had already notified Mobil Producing Nigeria Unlimited of its intention to exercise the right of pre-emption on ExxonMobil’s planned sale of its entire asset in Nigeria’s onshore and shallow waters.
However, a reliable source told THISDAY that the politics underlying the stoppage of the deal could markedly derail the new verve the Petroleum Industry Act (PIA) was expected to bring to the industry.
It was learned that NNPC was intending to have a special arrangement with a company belonging to a northerner operating in the oil and gas industry, under a “strategic management contract.”
Industry sources said that the state-owned oil firm, which is the major shareholder in the JV with ExxonMobil, might have exercised its right of first refusal on the assets as part of a new era, which will focus solely on building the long-term profitability of the NNPC Limited.
The Mele Kyari-led company had previously conveyed its decision to exercise its rights and match any offer by interested parties for the assets following ExxonMobil’s decision to receive bids for their share of the JV, the platform reported.
Seplat Energy subsequently put forward a winning bid for the assets and reached an agreement with ExxonMobil.
The right of pre-emption is a legal right to parties in a joint venture to be the first to be considered for any planned sale or takeover of assets in the JVs if either party chooses to trade them off.
A letter sighted by Platforms Africa, signed by the Group Managing Director, Kyari, and addressed to ExxonMobil, quoted NNPC as reiterating its resolve to take over the company’s share of the assets.
“We are aware that you reached an agreement to divest from onshore and shallow waters JVs,” the letter read, adding, “Clearly we are interested.”
Announcing the agreement, ExxonMobil had earlier said that the deals were subject to approval and the new position of NNPC, meaning that the whole process of sale and purchase agreement between ExxonMobil and Seplat Energy has to be discontinued.
Seplat Energy, the company that made the winning bid, had staked over $1.2 billion for the deal to acquire the entire share capital of MPNU plus contingent consideration and was waiting for the minister’s consent before the latest development.
This meant that the state-owned oil firm must not, based on its exercise of right of first refusal, pay below the $1.2 billion mark.
According to the letter, NNPC also reiterated that it had already transformed from being a corporation to being a profit driven company and it now had the capacity to buy over the share of ExxonMobil in the Joint venture.
The NNPC had recently announced a funding agreement with Afreximbank for up to $5 billion to grow its investment in new and existing upstream assets.
Recently, the publishers of the Africa Oil and Gas Report raised the alarm over the attempt by the national oil company to crowd out private investors, saying that enough space should be created for some level of diversity in investment. That alarm has now proved to be a wake-up call on increasingly seemingly grab-all posture.

Commenting on the pre-emption rights as expressed by NNPC, Publisher of the magazine, Toyin Akinosho, who had spoken on Arise News Channel, urged NNPC to free the space for entrepreneurs to come in, insisting that the company already has a lot in its basket and was even finding it difficult to cope.
Akinosho maintained, “NNPC is in JV with companies that produce at least 45 percent of our crude. That’s a lot of material for them already. The assets they operate are the least optimized of all the assets in the industry.”
While accusing NNPC of grabbing assets all over the country, he wondered why the national oil company was allegedly stifling investment in the sector. According to him, the kind of partners that NNPC may hand over the assets to are always not the most experienced in the space, adding that the whole idea is to “gift” it to a third party.
“It would not manage the assets, so any excuse about ‘this being taken over in the interest of the state’ is untrue. In the last three years, it has implemented Finance and Technical Service Agreements (FTSAs), with companies that it chooses to work the assets,” he added.