The federal government has finally approved the sale of ExxonMobil’s onshore assets to Seplat Energy, marking the conclusion of a $1.28 billion deal that was stalled for over two years.
The sale, which has been under regulatory review since February 2022, was confirmed by the CEO of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, in Abuja on Monday.
This approval signals a significant milestone in Nigeria’s energy sector, allowing Seplat Energy to take over ExxonMobil’s shallow water operations, after a lengthy delay that saw legal and regulatory hurdles stall the transaction.
Seplat Energy first announced its intent to acquire the Nigerian assets of ExxonMobil Corporation in February 2022.
The acquisition included all shares of Mobil Producing Nigeria Unlimited, a subsidiary of ExxonMobil, for the hefty sum of $1.28 billion.
However, the deal encountered a major roadblock when the Nigerian National Petroleum Corporation (NNPC) exercised its Right of First Refusal (RFR).
Under the Joint Operating Agreement (JOA) that governs oil joint ventures in Nigeria, NNPC’s RFR allowed it to have the first say in purchasing the assets in question.
NNPC’s action led to a drawn-out negotiation process that left the future of the deal hanging in the balance.
As the discussions continued, the situation became further complicated when, in July 2022, a judge in Abuja issued an injunction barring ExxonMobil from completing the sale of its Nigerian subsidiary.
This court ruling froze the sale process, with the federal government expressing concerns that approving the deal could compromise national interests.
The government, at that time, cited overriding national interests as a reason for not giving its approval, further deepening the uncertainty surrounding the deal.
After several months of regulatory limbo, President Bola Ahmed Tinubu intervened, promising that his administration would clear the way for the sale.
On October 1, during a national address, President Tinubu reassured Nigerians that the deal would receive the necessary ministerial approval within days, having already been greenlit by the regulator, NUPRC.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes,” Tinubu said.
“The ExxonMobil-Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act (PIA),” he added.
True to his word, the sale was approved by the federal government shortly after.
In July 2024, after more than two years of back-and-forth negotiations, NNPC withdrew its lawsuit that had stalled the sale of ExxonMobil’s assets.
This marked a crucial turning point, as the removal of legal obstacles finally allowed the sale to move forward.
NNPC’s decision came in line with the Petroleum Industry Act (PIA), which was designed to promote transparency and efficiency in Nigeria’s oil and gas sector.
With NNPC’s withdrawal, the pathway was clear for Seplat Energy to finalize the purchase of ExxonMobil’s onshore operations.
ExxonMobil is not the only international oil company (IOC) seeking to divest from Nigeria’s onshore oil sector.
In January 2024, Shell Plc announced its own plans to exit Nigeria’s onshore oil business.
Shell reached an agreement to sell its onshore oil assets for over $1.3 billion to a local consortium known as Renaissance, which includes ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin.
Beyond the initial price, Shell expects additional payments of up to $1.1 billion depending on the consortium’s performance in managing the assets.
The move by Shell follows a growing trend among IOCs to focus on offshore operations, which are often seen as less vulnerable to local security and environmental challenges.
TotalEnergies has also signaled its intent to sell its minority stake in a Nigerian onshore oil joint venture, following in the footsteps of ExxonMobil and Shell.
