The Nigerian National Petroleum Company (NNPC) Limited has said, it was not against the sale of Shares of Nigerian Agip Oil Company Limited (NAO) to Oando Plc.
NNPCL’s Chief Corporate Communications Officer, Garba Deen Muhammad made the clarification in a statement on Thursday.
Oando Plc has agreed with ENI to acquire 100% of the shares of Nigerian Agip Oil Company Limited (NAOC Ltd).
The sale is expected to nearly double Oando’s reserves to 996 million barrels of oil equivalent.
While NNPCL has clarified that it is not against the sale of shares of Nigerian Agip Oil Company Limited (NAOC) to Oando Plc., its subsidiary NNPC Exploration and Production Limited (NEPL) has raised questions over the deal, stating that Eni, which owns a 40% stake in the NAOC joint venture, did not obtain its consent in the sale.
A letter signed by the Managing Director, NNPC E&P Limited, and sent to the Managing Director, Nigerian Agip Oil Company Limited, on Monday, September 4, 2023, drew the company’s attention to the contractual/legal implications, of the alleged divestment of NAOC’s participating interest in OMLs 60, 61, 62 and 63 to Oando Oil Limited (OOL).
The letter said, “in relation to the Joint Operating Agreement (JOA) dated July 1991 governing the operations of the NAOC/NEPL/OOL Joint Venture:
1. Clause 19.1.1 of the JOA 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, 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.
“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.
“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’s 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) percent participating interest in the
NEPL/NAOC/OOL J, 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 regards to the management/operations of the assets”, the letter read.
Meanwhile, NNPC Ltd. said, it “wishes to state that the letter was sent by NEPL, an NNPC Ltd. subsidiary. However, nowhere was opposition or objection to the transaction mentioned in the letter. NEPL is only drawing attention to certain important clauses in the Joint Operating Agreement (JOA) between it, NAOC, and OOL; which might have been overlooked in error. Adherence to those clauses will protect the transaction, now and in the future”.