NewsNNPC Plans Acquisition Of ExxonMobil’s $1.6bn Oil Assets

NNPC Plans Acquisition Of ExxonMobil’s $1.6bn Oil Assets

March 04, (THEWILL) – The Nigerian National Petroleum Company (NNPC) Ltd has written to Mobil Producing Nigeria Unlimited, stating its intention to exercise a Right of Pre-emption on ExxonMobil’s planned sale of its asset.

The development is coming just a week after ExxonMobil announced the plan to sell 40 percent stake in four oil mining licences to Seplat for $1.6bn.

ExxonMobil had said the sale will support the company’s disciplined investment strategy, an effort to enhance industry participation.

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The sale agreement includes more than 90 shallow-water and onshore platforms and 300 producing wells.

Both firms had entered the contract, with Seplat set to buy out ExxonMobil’s stake of $1.3bn, a deal that could ultimately reach around $1.6bn under certain conditions.

But the NNPC according to a letter from the Group Managing Director, Mele Kyari, has notified Mobil Producing Nigeria Unlimited of its intention to exercise a Right of Pre-emption on the planned sale of its entire asset in Nigeria’s onshore and shallow waters.

Right of pre-emption is a legal right to parties in a joint venture to be the first to be considered for any planned sale or takeover of assets in the JVs if either parties choose to trade them off.

The latest decision from the NNPC implies that the Sales Agreement between SEPLAT and ExxonMobil will no longer continue.

In the letter signed by Kyari, and addressed to ExxonMobil, the NNPC reiterated its resolve to take over the ExxonMobil’s share of the assets.

The letter reads in part, “We are aware that you reached an agreement to divest from onshore and shallow waters JVs, clearly we are interested.”

Following the implementation of the Petroleum Industry Act (PIA), the NNPC in the letter stated that it has been transformed from being a corporation to a profit driven company.

The National Oil Company, according to the letter now has the capacity to buy over the share of ExxonMobil in the Joint ventures.

The NNPC is currently being positioned to be the most capitalised company in Africa as the PIA has provided business opportunities that will enable the National Oil Company earn more revenue for the country.

The PIA has also raised shareholders’ expectations on the company, even as it has given it a wide room to make progress.

The PIA has also put all money-making options on the table and the NNPC is currently taking advantage of the legislation,

The NNPC had on January 27 secured a $5bn corporate finance commitment from the African Export Import Bank to fund major investments in Nigeria’s Upstream sector.

The move is a major milestone achievement in the quest for the corporation to scale up investments in the oil and gas industry following the commencement of the implementation of the Petroleum Industry Act.

The NNPC’s $5bn corporate finance commitment from Afreximbank has been described by oil industry stakeholders as a dividend of the PIA and the incorporation of the NNPC as a limited liability company.

Under the NNPC Ltd funding strategy for selected upstream investments, the Company had raised between $3.5bn and $5bn as corporate finance to fund major upstream investments.

To achieve this objective, the NNPC would be taking over ownership from non-investing partner through acquisition of pre-emption rights in the sample Joint Venture.

The NNPC’s strategy would also see the company investing in assets to address integrity, bottlenecking and growth issues including rig-less activities, and drilling campaigns in the oil industry.

The funding would also be used to finance part of the NNPC’s investment including acquisition of interest in quality upstream oil and gas producing assets.

The acquisition is an integral part of the NNPC’s corporate strategy to rebalance its portfolio by divesting from some toxic assets to acquire choice strategic assets that will help support its long-term strategic objectives.

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