The alleged plan by Shell Petroleum Development Company (SPDC) to sell its shares in some oil and gas assets to some indigenous Nigerian operators is yet receive approval by the regulatory authorities because the mandatory Ministerial Consent onsent is yet to be granted.
Recently, media reports said some Nigerian indigenous oil and gas companies under the Renaissance Africa Energy Consortium announced plans to acquire the SPDC interest in Nigeria in some onshore and shallow water oil and gas assets.
The reports named members of the acquiring consortium to consist of ND Western Limited, FIRST Exploration and Petroleum Development Company Limited, the Waltersmith Group, and a foreign partner, Aradel Holdings Plc., the Petrolin Group.
Although the group confirmed they were yet to secure the mandatory regulatory approvals by the upstream petroleum industry regulator, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to seal the deal, they said the landmark transaction was part of its strategy to firmly establish itself in the Nigerian oil and gas market.
However, reacting to the announcement by the consortium, the NUPRC, which is the apex regulatory authority in the upstream oil and gas industry, said in a statement on Saturday that the deal cannot be completed without SPDC receiving the Ministerial Consent to transfer its shares in the oil and gas assets.
“The Commission invites the general public to TAKE NOTICE that the assets purported to have been sold by the Divesting Companies cannot be deemed sold yet, as the Commission is currently carrying out due diligence on the transaction to ensure that the divestment does not result in unwarranted liabilities for the Federal Government of Nigeria,” the statement said.
The Commission made reference to some reports about ongoing discussions suggesting plans by certain International Oil Companies (“Divesting Companies”) have completed the sale of some of their oil and gas assets to some indigenous Nigerian companies.
The Commission clarified that oil and gas assets in Nigeria can only be transferred in accordance with the requirements spelt out in the provisions of the Petroleum Industry Act 2021, and the Guidelines and Procedures for obtaining Minister’s Consent to the Assignment of Interest in oil and Gas Assets, 2021 (together with the “Applicable Laws”).
“Under the Nigerian law, while the entering into of a Sale and Purchase Agreement (SPA) between an assignor and an assignee constitutes an agreement to sell the relevant licence or lease in accordance with the terms of the SPA, the transfer can only be consummated upon the grant of Ministerial Consent to the transfer, following a recommendation from the Commission, and satisfaction of the conditions for the grant of the consent by the Minister,” the Commission explained in a statement signed by the Commission Chief Executive, Gbenga Komolafe.
In addition, Komolafe said the Commission’s recommendation to the Minister to grant Ministerial Consent for the transfer of a licence or lease would be based on a detailed and diligent review of the transaction by the Commission to confirm it meets certain fundamental criteria.
Apart from ensure the acquirers have the requisite competence in technical and financial ramifications, fulfilment of decommissioning and abandonment obligations, the Commission said they must also have the capacity to ensure sustainability of environmental, social and corporate governance, including compliance with host community obligations, industrial and labour relations framework.
Other key criteria include confirmation that there were no legal encumbrances hindering the consummation of the transaction and that the acquirers were fit and proper persons acceptable to the Federal government to carry on business in Nigeria.
“These are criteria for the continued operational efficiency and effectiveness in the operations of the assets to ensure a sustainable increase in Nigeria’s oil and gas reserves and production,” the CCE said.
He said all the Divesting Companies and their potential assignees were currently complying with the relevant requirements of the law regarding the divestment process under the Applicable Laws and the Commission following a public notice issued to them.
