The Nigeria National Petroleum Company Limited, NNPC, has said that Eni’s subsidiary company did not obtain its consent before announcing the sale of its onshore oil assets to Oando PLC, which could be tantamount to a breached term of its joint operating agreement.
The development raises suspicion following the speed of the transaction as announced and underscores the impediments which the international oil majors have faced in their years-long efforts to sell onshore oil and gas assets in Nigeria.
As contained in September 4th letter, NNPC said Nigerian Agip company Ltd (NAOC) did not obtain their consent before the announcement of the deal and that it is compulsory before transfer of participating interest in a joint venture.
NNPC called the inability to seek prior written consent was called “a grave breach” of the joint operating agreement
NNPC Exploration and Production Limited, the state oil firm subsidiary holds a 60% stakes in a NAOC join ventures.
Eni, who speaks for its subsidiary NAOC Ltd, on the other hand disagreed with the breach of the joint ventures contract statement made by NNPC
It said that NNPC has pre-emption right on the JV shares but Eni does not have any contractual obligation to inform NNPC about the deal before hand since the information was price sensitive for the potential buyer.
It further said that the pre-emption procedures and other consent will be “duly and carefully followed” at the applicable time. The spokesperson of NNPC Garba Deen Muhammed confirmed the sent letter to NAOC, but said the letter did not indicate an objection to the transaction.
“NEPL is “NEPL is only drawing attention to certain important clauses in the JOA, which might have been overlooked in error. Adherence to those clauses will protect the transaction now and in the future,” he said.
Oanda refused to comment on the letter rather said “we trust that, as requested by NEPL, NAOC will engage accordingly to ensure that their concerns are addressed
Eni had not assigned its interest in NAOC JV to Oando but had signed agreement to sell 100% of the shares of NAOC Ltd, subject to all regulatory and partner approval and due diligence, said Oando.
Oil Executives say the conclusion of the asset is relevant in boosting investment into onshore oil and gas assets, rather legal and regulatory issues have barricade other deals, notably Exxon Corps asset sale to local firm Seplat.
Under investment and theft has led to the African largest oil exporter, Nigeria inability to produce in the last several years. Almost all international oil majors, like Shell and ExxonMobil have onshore sales underway amid the theft and oil spills even perpetual clashes with communities and more focused exploration budgets.
Legal challenges over Niger Delta spills, which they blame on sabotage and Vandalism of pipelines and illegal refinery has been a big long faced issues of the Oil Majors in Nigeria.
The government should pend every asset sales by majors until community concerns are addressed said the coalition of 10 environmental rights and community groups in Delta region and also condemned the sale.
In a statement by Spokesperson Kome Odhomor, “We assert that prior to any sale of oil assets, the company must address several cases and concerns bordering on the ecological, health, economic, and social impacts of its operations in the Niger Delta,”