NNPC Subsidiary Raises Questions over Agip-Oando Assets Sale Deal
Says its consent not sought before agreement was reached Oando insists deal still awaiting regulatory approval Oil workers want suspension of contract, shut down operations
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 THISDAY yesterday, 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 over 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