SETBACK FOR AGIP-OANDO ACQUISITION DEAL AS NNPC MOVES TO INVALIDATE TRANSACTION

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On September 6, 2023, it was reported that Oando Plc’s agreement with Eni to acquire a 100 percent stake in Eni’s subsidiary, Nigerian Agip Oil Company (NAOC) Limited, has encountered a significant hurdle. This development comes as the Nigerian National Petroleum Corporation (NNPC) Limited intervenes in the deal.

Oando Plc had announced on Monday its intention to purchase all stakes held by Italian oil major, Eni, in the joint venture operated by NAOC Limited on behalf of the NNPC Limited. According to Oando Plc, the completion of the transaction, which would increase Oando’s participating interests in oil mining leases (OMLs) 60, 61, 62, and 63 from 20 percent to 40 percent, is contingent on ministerial consent and other necessary regulatory approvals.

However, the NNPC Limited, in a letter dated September 4, 2023, addressed to NAOC Limited, drew attention to relevant clauses in the existing Joint Operating Agreement (JOA) that govern the process of interests. The NNPC emphasized that Eni’s purported divestment of shares to Oando Oil Limited violates Clause 19.11 of the JOA, which requires prior written consent from all parties involved.

Furthermore, the NNPC pointed out that NAOC did not inform the NNPC Exploration and Production Limited (NEPL) of any proposed assignment of its participating interest in Oando Oil Limited or any other party. Additionally, NAOC did not seek and obtain the mandatory pre-divestment written consent and approval from NEPL, as stipulated in Clause 19.11 of the JOA.

The NNPC underlined the gravity of this breach and reserved its rights regarding the alleged assignment to Oando Oil Limited, stating that failure to obtain NEPL’s consent may lead to the invalidation of the purported assignment.

In response to the proposed acquisition, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) expressed strong opposition, threatening to withdraw its members from all offices and oil fields. The association criticized Oando for not engaging or informing the union about the acquisition, potentially putting over 3,000 indigenous workers’ jobs at risk.

This recent development mirrors a previous instance in which the NNPC halted a similar acquisition deal between Septlat Energy and ExxonMobil. The outcome of this dispute between NNPC and Oando Plc remains uncertain, pending further confirmation from NAOC Limited.

 

 

 

 

 

 

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