IOC Divestments: New Updates Emerge As Agip, Equinor Receive Ministerial Approval

The Federal Government, through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), issued an update on recent divestment activities involving International Oil Companies (IOCs) on Monday, stating that Ministerial approvals have been granted for the divestments of Nigerian Agip Oil Company (NAOC) to Oando Petroleum and Equinor to Chappal Energies.

According to a statement signed by Mrs Olaide Shonola, NUPRC’s Head, Public Affairs Unit, Mobil Producing Nigeria Unlimited’s (MPNU) divestment to Seplat Energy is being reviewed following the resolution of a dispute with the Nigerian National Petroleum Corporation (NNPC).

Throughout these processes, NUPRC emphasised adherence to the regulatory framework established by the Petroleum Industry Act, ensuring transparency and compliance with best practices.

According to independent reports, the consent approval process for divestments is guided by PIA provisions and clearly defined frameworks in the assignment regulations, and it adheres to international best practices.

It was discovered that the process considers technical capability, financial viability, legal compliance, decommissioning and abandonment, host community trust, environmental remediation, industrial relations, labour issues, and data repatriation.

Part of the statement reads: “The Commission, in a letter dated August 9, 2023, granted NAOC permission to proceed to the commercial stage of the transaction.”

“As a result, on November 7, 2023, NAOC submitted a formal application requesting the Minister of Petroleum Resources’ consent to the NAOC Divestment.

“In accordance with its processes, the Commission requested the information contained in the Commission’s due diligence checklist on the transaction in a letter dated December 14, 2023, and NAOC provided the information requested in a letter dated January 10, 2024.

“As a result, the process was carried out in accordance with the requirements of relevant laws, regulations, and guidelines such as the Petroleum Act, Petroleum Industry Act, Petroleum Drilling and Production Regulations, and the Upstream Asset Divestment and Exit Guidance Framework.

“The Divestment Framework assessed divestments based on technical capacity, financial viability, legal compliance, decommissioning and abandonment, host community trust and environmental remediation, industrial relations and labour issues, and data repatriation.

“In addition, NAOC obtained a waiver of pre-emption and consent to the divestment from their block partner, NNPC.
To ensure due diligence, the Commission, in collaboration with reputable external consultants, identified significant pre-sale liabilities inherent in the assets to be divested by NAOC and developed proactive measures to ensure that the identified liabilities are adequately provided for.

“Furthermore, the Commission’s thorough evaluation and due diligence process, based on the Seven Pillars of the Divestment Framework, ensured that potential assignees were capable and legally compliant, as well as that all legacy liabilities were identified and managed appropriately.

“The Commission then made recommendations to the Honourable Minister of Petroleum Resources based on comprehensive assessments that included the timeline for reviewing applications under the PIA and the Commission’s regulatory process.”

“The Equinor-Chappal divestiture went through the same regulatory process as the NAOC-Oando transaction. In comparison, MPNU notified the Commission on February 24, 2022, that it intended to assign 100% of its issued shares to Seplat Offshore Energy Limited. The Commission did not approve this assignment because MPNU did not obtain a waiver of pre-emption rights or the consent of NNPC, its block partner, to the divestment.

“It is worth noting that Suit No: FCT/HC/BW/173/2022 Nigerian National Petroleum Company Limited vs. Mobil Producing Nigeria Unlimited, Mobil Development Nigeria Inc., Mobil Exploration Nigeria Inc., and Nigerian Upstream Petroleum Regulatory Commission addressed NNPC’s right to pre-emption and consent under the NNPCL/MPNU Joint Venture Joint Operating Agreement.

“NNPC and MPNU resolved their dispute with NNPC in June 2024, and MPNU informed the Commission of the resolution in a letter dated June 26, 2024. Following the resolution of this dispute, the Commission communicated its no-objection decision to the assignment in a letter dated July 4, 2024, and requested that MPNU provide the information and documentation required by the Commission’s due diligence checklist so that the Commission could conduct its due diligence as required by the PIA. MPNU provided the Commission with the requested information in a letter dated July 18, 2024.

“As a result, MPNU’s application for consent to the Commission is currently undergoing due diligence review under the same Divestment Framework that was used for the NAOC-Oando and Equinor-Chappal divestitures. The Commission’s due diligence process is ongoing and within the PIA’s 120-day timeline.

“Given the foregoing, the Commission wishes to assure the public that the process for approving divestment applications is guided by the provisions of the PIA and clearly defined frameworks in the assignment regulations, as well as international best practices.

“NUPRC, as an organisation guided by law and professionalism, will continue to pursue its statutory mandate in a legal, independent, technical, commercial, and professional manner, acting under the authority of the PIA.”