NNPCL, EXXONMOBIL SIGN $1.28BN ASSET DIVESTMENT DEAL
Background and Agreement Details:
Two years after the divestment plan was announced, NNPC Ltd. and ExxonMobil have signed a $1.28 billion asset divestment agreement. This deal involves MPNU, Mobil Development Nigeria Inc., and Mobil Exploration Nigeria Inc. NNPC stated, “Settlement agreement between NNPC Ltd. and MPNU, Mobil Development Nigeria Inc., and Mobil Exploration Nigeria Inc. signed regarding the proposed divestment of a 100 per cent interest in MPNU to Seplat Energy Offshore Limited.”
Presidential Directive and Resolution Efforts:
The development follows President Bola Tinubu’s directive on May 28 to resolve the divestment issue stalling the Seplat and ExxonMobil deal for over two years. Tinubu assured the ExxonMobil delegation of the Federal Government’s commitment to resolving the divestment issues. Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, stated that the President had tasked him and NNPC Ltd. Group Chief Executive Officer Mele Kyari to address the divestment matter, which they are diligently working on.
Economic Impact and Production Decline:
Lokpobiri revealed that Nigeria lost $34 billion in the last two and a half years due to a drop in production from the assets being divested by ExxonMobil to Seplat Energy. The production declined from 600,000 barrels per day (bpd) to 120,000 bpd, resulting in a shortfall of 480,000 bpd. This loss amounts to $34 billion at a conservative $80 per barrel.
Timeline of the Divestment Plan:
In February 2022, Seplat announced an agreement to acquire ExxonMobil’s 40 percent stake in MPNU, with expectations to complete the transaction in the second half of the year. However, on May 19, 2022, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) declined to approve the acquisition, citing “overriding national interest.”
Two months later, Seplat reported that NNPC Ltd. had secured a court injunction preventing ExxonMobil from selling its assets in Nigeria. This led former President Muhammadu Buhari to reverse his initial authorization for the acquisition on August 10, 2022, shortly after granting approval.
Due to delays in securing approval, Seplat extended the Share Sale and Purchase Agreement (SSPA) with ExxonMobil in May 2023. On May 17, Seplat indicated progress in acquiring MPNU assets, and a week later, the company extended the SSPA again.
Future Prospects:
With the recent signing of the settlement agreement, Nigeria could increase its daily crude oil production by at least 700,000 bpd, potentially reaching about two million bpd by the end of the year.
Source: Techeconomy
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