Financial Energy Review
The Federal Government has announced the approval of ExxonMobil’s $1.283 billion divestment of its offshore shallow water oil and gas assets to Seplat Energy Plc. The announcement is coming well over two years after the two companies announced the transaction in February 2022.
With the closing of the transaction, the entire 40 per cent equity holding in the offshore shallow water business of ExxonMobil in the Nigerian Joint Venture asset with the national oil company, NNPC Limited, will be fully transferred to Seplat Energy Plc. Also to be transferred to Seplat Energy include ExxonMobil’s Qua Iboe Terminal, one of Nigeria’s largest export facilities and a 51% interest in Bonny River Terminal and Natural Gas Liquids Recovery Plants at East Area Project (EAP) gas compression facility with capacity to process 18,000 tonnes of natural gas and Oso gas liquids project,
At the announcement of the deal in 2022, ExxonMobil held 40% operating ownership of four oil mining leases (OMLs) involved in the transaction. They include OMLs 67, 68, 70, 104) and associated infrastructure while NNPC Ltd held the remaining 60 per cent.
The divested assets were producing 95,000 barrels of oil equivalent per day (kboepd) as at 2020 through a high-quality operation with a highly skilled local operating team and a track record of safe operations. This reflects 186 per cent increase in production for Seplat from 51 kboepd to 146 kboepd. Seplat’s liquids reserves increased by 170 per cent from 241 million barrels (MMbbl) to 650 MMbbl and 14 per cent increase in gas reserves from 1,501 billion standard cubic feet (Bscf ) to 1,712 Bscf, plus significant undeveloped gas potential of 2,910 Bscf as at 2022 when the deal was announced.
The Commission Chief Executive (CCE) of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, confirmed Federal Government’s approval of the transaction in Abuja on Monday.
Komolafe spoke at the NUPRC’s third anniversary celebration and launch of Project 1MMBOPD Initiative. He said: “The ExxonMobil approval was one of the four divestment approvals granted by the federal government out of the five applications.
“We are happy today to announce the status of divestment exercise conducted diligently by the Commission in line with the provisions of the PIA. Out of the total of five divestment applications for consent received by the Commission, a total of four, representing 80 per cent passed regulatory test and secured ministerial consent.
“The transactions are: Mobil Producing Nigeria Unlimited (MPNU) to Seplat Energy Offshore Limited; Equinor Nigeria Energy Company Limited to Project Odinmin Investments Limited; Nigerian Agip Oil Company Limited to Oando Petroleum and Natural Gas Company Limited and TotalEnergies EP Nigeria Limited to Chappal Limited.”
However, he said the divestment of Shell Petroleum Development Company Limited’s assets to Renaissance Africa Energy Company Limited could not scale regulatory test.
In July, NUPRC approved the sale of onshore assets by Italy’s Eni to Nigerian producer Oando and Equinor’s sale of its majority stake in the deepwater Agbami field to Nigerian-owned Chappal Energies. Eni has signaled its continued focus on Nigeria’s deepwater opportunities—a strategy ExxonMobil may also be pursuing.
ExxonMobil had at the United Nations General Assembly (UNGA), held last month in the United Sates, indicated interest to invest up to $10 billion in a Nigerian deepwater project. Additionally, Nigerian government officials revealed that American oil major may spend another $2.5 billion to increase its current production to around 50,000 bopd in the next few years.
The Federal Government has been pushing to finalize the long-delayed deals, betting that locally owned operators will inject the necessary capital. In July, the nation’s minister of state petroleum resources said his goal was to boost national production to 2 million bopd by year end.
The latest Oil Market Report from the Organization of the Petroleum Exporting Countries (OPEC), citing secondary sources, said Nigeria’s oil output reached 1.4 million bopd in the third quarter of this year, up from an average of 1.2 million bopd in 2022.
