By Bassey Udo
TotalEnergies Exploration and Production Nigeria Limited on Thursday secured the regulatory clearance to assign its entire 12.5 percent contractor interest in Oil Mining Lease (OML) 118 to Shell Nigeria Exploration and Production Company (SNEPco) and Nigerian Agip Exploration Limited (NAE).
The clearance followed the approval by the apex industry regulatory, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) signing off the Sales Purchase Agreement (SPA) by TotalEnergies Exploration and Production Nigeria Limited with the joint venture.
Details of the agreement showed that TotalEnergies was given the green light to transfer 10 percent of its interest in the lease to SNEPco at a cost of about $408 million, while NAE would pay $102 million for the remaining 2.5 percent equity.
The NUPRC said on Thursday that the regulatory approval granted the deal was pursuant to Section 95 of the Petroleum Industry Act (PIA) 2021, which mandates the Commission to carry out due diligence on SNEPco to ascertain their financial capacity and technical competence to manage the concession effectively.
“SNEPco and NAE have demonstrated both technical and managerial competence to optimally contribute to the upstream operations (explore, develop and produce) in OML 118. They already maintain a participating interest in the asset,” the Commission said.
Based on the presentations and documents submitted, the Commission said there was clear evidence that they possess access to funding to meet their financial obligations in the development of the lease.
The NUPRC said TotalEnergies as “a committed operator in Nigeria’s vibrant upstream sector, had also paid the statutory application fee for the deal.”
The Commission said SNEPCO and NAE would bear the decommissioning and abandonment liabilities owed by TotalEnergies to the Federal Government of Nigeria with respect to the divested interest.
The upstream petroleum industry regulator clarified that the divestment exercise was however subject to a ministerial consent in line with Sections 95(1), (2), (7), (11) and 12 of the Petroleum Industry Act, 2021.
The Commission said it therefore expects SNEPco and NAE to fulfill their obligations in the deal by paying $25.5million and $10.2million being the values for 5% and 2% respectively of the transaction purse on the total value of $510m as premium on ministerial consent and processing fees.
Besides, the Commission said the assignees were also expected to give an undertaking in favour of the NUPRC that they would bear all the decommissioning and abandonment liabilities and the host community liabilities owed by TotalEnergies
