In a recent broadcast marking Nigeria’s Independence Day, President Bola Tinubu announced that the much-anticipated divestment transactions involving ExxonMobil and Seplat Energy are set to receive ministerial approval soon. This development comes after the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) affirmed that the divestment process adhered to the provisions outlined in the Petroleum Industry Act (PIA). Tinubu emphasized his administration’s commitment to fostering an investment climate characterized by free enterprise, underscoring the importance of maintaining regulatory integrity throughout the process. He expressed optimism that the ExxonMobil and Seplat transactions would invigorate the oil and gas sector, ultimately benefiting the nation’s economy.
The divestment agreement between Seplat and ExxonMobil has faced significant delays, with the deal being stalled for over two years. The notable roadblock came in July 2022 when the Nigerian National Petroleum Company Limited (NNPC) successfully obtained a court order to temporarily halt ExxonMobil’s plans to transfer its assets to Seplat Energy. The NNPC aimed to take control of the assets for itself, leading to complex legal proceedings that complicated the transaction. Seplat initially agreed to acquire the U.S. oil giant’s subsidiary for no less than $1.28 billion in a deal originally announced in February 2022.
As the legal disputes unfolded, a breakthrough occurred in 2023 when the NNPC lifted the court injunction, allowing the sale to finally proceed. This decision came after consultations revealed that the NNPC could benefit more from divesting its ownership stake in ExxonMobil’s assets rather than pursuing a joint venture with Seplat Energy. The NNPC’s shift in strategy reflects a broader trend towards restructuring within the Nigerian oil and gas sector, as industry players seek more efficient management and collaboration models.
Industry experts, including oil and gas authority Prof. Wumi Iledare, responded positively to President Tinubu’s recent update on the ExxonMobil asset sale. Iledare acknowledged that while some stakeholders harbor reservations about divestment practices, the transaction represents a significant opportunity for Nigerian companies and the economy. He criticized the notion of the government mingling too directly in regulatory matters, suggesting that such announcements should be left to the appropriate commissions to avoid the perception of politicization. His comments indicate a desire for clear separation between political oversight and operational processes in the sector.
Iledare’s insights also extended to recommendations for the NNPC, urging it to consider selling its share in the joint venture to companies like the Dangote oil refinery. Such action could potentially enhance investment in domestic refining capacity, contributing to Nigeria’s overall energy security and economic stability. The expert’s commentary highlights a broader need for strategic realignments within the industry as it navigates the complexities of the global energy landscape and local supply challenges.
In conclusion, the imminent approval of the ExxonMobil and Seplat divestment marks a significant development for Nigeria’s oil and gas sector and reflects the government’s overarching strategy to rejuvenate the industry through enhanced regulatory frameworks and private sector participation. As the divestment progresses, it is essential for stakeholders—including government, regulatory bodies, and industry players—to ensure that the principles of transparency and efficiency are upheld, paving the way for a more vibrant and productive energy landscape that aligns with Nigeria’s economic aspirations.
