Why Buhari overruled NNPC on Seplat, ExxonMobil’s $1.52bn deal

The desperate need to attract foreign direct investment following Nigeria’s poor fiscal environment may be the reason President Muhammadu Buhari approved the ExxonMobil’s $1.52 billion sale of a swathe of Nigerian offshore assets to London-listed independent Seplat Energy despite opposition from the Nigerian National Petroleum Company (NNPC) Limited.

The deal which was initially announced in February this year was set to follow the well-trodden path of other oil and gas deals in Nigeria which have been subject to lengthy delays – and are sometimes not completed at all – due to the highly litigious nature of Nigeria’s business environment.

The proposed acquisition had been subjected to a series of delays by the government on the deal, for which industry analysts said some government officials were not comfortable with the acquisition by a wholly indigenous oil company.

Federal government had turned down the application for ministerial consent necessary to seal the $1.5bn planned deal between Seplat Energy Plc, a major energy company in Nigeria, and US-based ExxonMobil.

READ ALSO: Buhari overrules NNPC, grants approval for Seplat, ExxonMobil deal

In a statement on Monday, Femi Adesina, presidential spokesperson, said Buhari made the approval considering the ample benefits of the divestment to the country’s oil sector.

“In his capacity as minister of petroleum resources, and in consonance with the country’s drive for foreign direct investment in the energy sector, President Muhammadu Buhari has consented to the acquisition of Exxon Mobil shares in the United States of America by Seplat Energy Offshore Limited,” the statement reads.

In July, Seplat Energy informed investors that NNPC blocked the deal through a court injunction restraining Exxon Mobil from selling its assets in the country.

The CEO of Nigerian Upstream Regulatory Commission (NUPRC), Gbenga Komolafe had adduced government’s initial rejection of the deal citing overriding national interest, failure to follow due process and inappropriate application as major reasons for rejecting a deal that could deliver higher taxes, increased production, and generate more oil revenue to Africa’s biggest oil producing country.

But, Femi Adesina, Special Adviser to the President on media and publicity said in the statement that “Exxon Mobil had entered into a landmark Sale and Purchase Agreement with Seplat Energy to acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Mobil Development Nigeria Inc, and Mobil Exploration Nigeria Inc, both registered in Delaware, USA.”

The analysts have lauded the positive disposition of the President saying that this will engender confidence in the local operators as major international oil companies continue with sales of their assets in the country.