Oil production: FG moves to resolve Seplat, ExxonMobil dispute

The federal government has initiated talks with a delegation from Seplat Energy to address the prolonged impasse stemming from the delayed $1.3 billion ExxonMobil’s oil asset sale, which has lingered for nearly two years.

While the specifics of the meeting held in Abuja remain undisclosed, Senator Heineken Lokpobiri, the Minister of State for Petroleum (Oil), hinted at discussions centered on finding resolutions to the protracted dispute. Lokpobiri emphasized the urgency of resolving the matter swiftly, as Nigeria aims to aggressively boost its crude oil production, which has seen a decline for over three years.

Under the proposed deal unveiled in February 2022, Seplat had agreed to pay $1.3 billion for an Exxon unit holding a 40% operating stake in four shallow-water licenses. The successful completion of this transaction would mark one of the largest divestments in Nigerian history, following a trend initiated by energy majors like Shell Plc in the late 2000s.

Former President Muhammadu Buhari initially endorsed the sale in August of the preceding year, during his tenure as Nigeria’s oil minister. However, he later rescinded his approval after the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the country’s energy regulator, rejected the endorsement. The state-owned Nigerian National Petroleum Company Limited (NNPC), holding 60% of the permits, opposed the sale, asserting its right to acquire the blocks itself and subsequently filed a lawsuit against Exxon in Abuja.

Seplat disagreed with NNPC’s position, with its Chief Executive, Roger Brown, emphasizing that the acquisition involves purchasing shares from US companies, making it a distinct transaction.

The significant value for Seplat in the Exxon deal lies in the natural gas within the blocks, according to Brown, as his company is already a major domestic supplier of the fuel to Nigerian power plants.

Earlier in June ExxonMobil officials met with President Bola Tinubu in Abuja, during which Tinubu pledged to ensure competition in the country’s oil and gas industry. Exxon Nigeria currently controls four oil mining leases and holds interests in major facilities, including the Qua Iboe Terminal.

Following the meeting with the Seplat delegation, Lokpobiri described the discussions as fruitful, marking a pivotal step toward resolving the deadlock. He stated, “In pursuit of resolving the ExxonMobil and NNPC divestment dispute, as per our mandate to aggressively increase production, I engaged in constructive discussions with Seplat Energy, led by its Managing Director, Mr. Roger Brown. Our deliberations were incredibly fruitful, marking a significant step forward in ending the impasse and paving the way for the nation to reap prosperity from the assets acquisition.”

In an effort to streamline Nigeria’s oil output, the federal government had withdrawn court cases against Eni and Shell earlier in the week.