Nigeria may boost its daily crude oil output by 480,000 barrels as the Nigerian National Petroleum Company Limited (NNPCL) and ExxonMobil move towards resolving the dispute over ExxonMobil’s asset sale to Seplat Energy.
NNPCL said on Thursday that it has reached a settlement with ExxonMobil in Nigeria over the sale of Seplat Energy Offshore Limited a 100% stake in Mobil Producing Nigeria Unlimited.
This is coming barely 24 days after President Bola Tinubu announced his intervention in the debacle between NNPCL and ExxonMobil hindering the sale of the assets to Seplat.
The Minister of States for Petroleum, Heineken Lokpobiri, said recently that Nigeria had lost about $30bn in the past two and a half years as a result of the unsuccessful divestment.
The minister expressed concerns that Nigeria was losing about 480,000 barrels of crude oil per day due to the Seplat/ExxonMobil crisis.
He said the asset was producing about 600,000bpd until the crisis began in 2022, saying the nation was losing millions of dollars daily.
Recall that ExxonMobil and Seplat Energy had in 2022 announced a $1.6bn sales agreement deal that would see Seplat purchase ExxonMobil’s complete shares in the NNPCL.
However, just when all hopes were high for the completion of the deal, a letter dated May 16, 2022, by the Nigerian Upstream Petroleum Regulatory Commission to ExxonMobil, stated that the deal could no longer hold because the NNPCL had exercised its right of pre-emption first refusal on the assets.
Right of pre-emption is a legal right to parties in a joint venture to be the first to be considered for any planned sale or takeover of assets in the JVs if either party chooses to trade them off.
According to reports, the NNPCL objected to the sale of ExxonMobil’s equity to Seplat and insisted on exercising its first refusal right after which the company reportedly made an offer above $1.6bn to ExxonMobil.
But after about two years of litigation, there seems to be an end in sight to the crisis.
According to the minister, the oil output from the asset dropped to 120,000bpd down from 600,000bpd since the disagreement began.
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Lokpobiri said, “For the past two and a half years, oil has been hovering around $80 per barrel. 480,000bpd, multiply it by two and a half years, it will give you about $34bn. If one asset was doing about 600,000 barrels; but because of the problems which we are trying to resolve, production declined to 120,000 barrels, which means we’ve lost about 480,000bpd. Multiply it by $80, every day you get about $240m; multiply it by two and a half years; we are talking of over $30bn. Inject that into our economy today, the dollar will naturally drop. This exchange rate is a matter of demand and supply”.
The intervention of the President appears to have yielded the desired results with the NNPCL announcing the signing of a settlement agreement.
The energy company said, “Settlement agreement between NNPC Ltd. and Mobil Producing Nigeria Unlimited, Mobil Development Nigeria Inc., and Mobil Exploration Nigeria Inc. signed regarding the proposed divestment of a 100 per cent interest in Mobil Producing Nigeria Unlimited to Seplat Energy Offshore Limited”.
It is believed that the resolution of the controversies surrounding the sale of the asset to Seplat would add about 480,000 barrels to Nigeria’s low oil production.
