The much delayed handing over of ExxonMobil’s offshore shallow water business to Seplat owing to Nigerian Upstream Petroleum Regulatory Commission (NUPRC) right of first refusal objection has finally come to an end.

This was doused by the recent action taken by the Nigerian President Muhammadu Buhari for granting his consent to the acquisition and divestment plan of ExxonMobil’s offshore shallow asset. Buhari, who doubles as oil minister, granted ministerial approval to the deal, the presidency said in a statement on Monday 8 August, 2022 and reported by Reuters.

ExxonMobil Nigeria and nations indigenous energy company Seplat have in February, 2022 reached an asset sale agreement that subsequently transferred ExxonMobil’s offshore shallow asset to Seplat in a $1.28 billion acquisition deal.

ExxonMobil and Seplat are expected to operate the unit’s oil licenses in supporting Nigeria meet its OPEC production quota in the short term as well as accelerate the development of gas resources in the area.

In separate press release made available by Seplat and ExxonMobil in February stated that Seplat Energy, a Nigerian independent oil and gas company, through its wholly-owned subsidiary Seplat Energy Offshore Limited had entered an agreement to buy the entire share capital of ExxonMobil’s Nigerian offshore shallow water business which is 40 per cent stake in four oil mining licenses to Seplat at a whopping cost of $1.28 billion, plus a further consideration of up to $300 million based on the oil price and the average production of the unit, Mobil Producing Nigeria Unlimited, over a five-year period.

The above transaction was sequel by a legal action instituted by Nigeria’s petroleum regulator which the eventual court judgement was in favor of the NNPC Ltd. In the law suit, Nigerian National Petroleum Corporation NNPC was granted a temporarily court order blocking Exxon Mobil Corp. from selling assets in the country to Seplat Energy Plc.

The recent judgment was upheld by the presiding judge in the capital, Abuja, granting  the Nigerian National Petroleum Co. an “order of interim injunction” on July 6 barring Exxon “from completing any divestment” in a unit that ultimately operates four licenses in the West African nation,

Owing to the above court ruling, Nigeria’s petroleum regulator said it stood by its refusal to approve Exxon Mobil’s $1.28 billion sale of shares in its Nigerian unit to Seplat after President Muhammadu Buhari approved the transaction.

Nigerian Upstream Petroleum Regulatory Commission (NUPRC) head, Gbenga Komolafe, said under a new petroleum law passed last year, the petroleum minister can only grant consent for such an acquisition upon recommendation from the commission. Buhari also acts as the petroleum minister.

“The issue at stake is purely a regulatory matter and the commission had earlier communicated the decline of ministerial assent to ExxonMobil in this regard. As such the Commission further affirms that the status quo remains,” the NUPRC said.

NUPRC had earlier this year declined to okay the deal without publicly giving a reason but President Buhari granted consent to the deal.

A presidency source said that Buhari would meet his junior oil minister Sylva Timipre over the issue. Timipre is expected to issue a statement after the meeting, the source added.

The sale is also opposed by state firm NNPC Limited, which argues it has pre-emptive rights to the assets.

Under the Petroleum Industry Act, which was passed last year after nearly two decades in the making, a holder of a petroleum exploration licence cannot “transfer his licence or any right, power or interest without prior written consent of the commission.”

The law also says “where the consent of the minister is granted in respect of the application for a transfer, the commission shall promptly record the transfer in the appropriate register.”

It is not clear if the petroleum minister’s consent can override an objection from the commission.

Oil majors operating in Nigeria, including Shell and TotalEnergies want to exit shallow water operations, citing concern over disruptions by local communities and focus on deep water drilling

Seplat is listed on the London and Nigerian stock exchanges.