Seplat remains committed to purchasing Nigerian oil, natural gas assets from ExxonMobil

(Bloomberg) – Seplat Energy Plc remains committed to purchasing Nigerian oil and gas assets from ExxonMobil Corp. by completing a deal that’s been held up by the West African state for more than a year.

The Lagos and London-listed company is hoping that President Bola Tinubu, the new leader of Africa’s largest crude producer, will adopt a different approach than his predecessor, who reversed an initial decision to approve the transaction.

“We’re still interested in the assets,” Seplat Chief Executive Officer Roger Brown said in an interview at the firm’s UK offices. “We still like the company we’re buying. We think it’s a game changing operation.”

Under the deal unveiled in February 2022, Seplat agreed to pay $1.3 billion for an Exxon unit that holds a 40% operating stake in four shallow-water licenses in a purchase that would almost quadruple the independent company’s oil output to more than 130,000 bpd. If the transaction goes ahead, it will be one of the biggest divestments in Nigerian history since energy majors like Shell Plc started offloading unwanted assets in the late 2000s.

Former President Muhammadu Buhari, who doubled as Nigeria’s oil minister, endorsed the sale in August before swiftly rowing back after the country’s energy regulator rejected his approval. Days before Buhari stepped down last month, Seplat announced it had extended the agreement with Exxon to allow more time to finalize the transaction.

State-owned Nigerian National Petroleum Co. — which owns 60% of the permits — has opposed the sale and sued Exxon in the capital, Abuja, claiming it has the right to acquire the blocks itself from the U.S. major. 

The Seplat boss disagrees with the NNPC because his firm is purchasing a subsidiary rather than licenses. “What we are buying are shares sold by U.S. companies, so that is a completely different animal because we’re buying a company,” he said. “Exxon’s read of the situation is the same.”

A spokeswoman for Exxon declined to comment on the transaction, citing a court injunction and arbitration proceedings. Spokesmen for Tinubu didn’t respond to questions from Bloomberg News.

Early signals from the Tinubu administration appear promising for supporters of the deal.

The new head of state met Exxon executives during his second week in office, saying on Twitter that the invitation demonstrated his government’s “efforts to secure the collaboration of critical players in the oil sector.” Advisers also prepared a report for the president in the run-up to his inauguration recommending him to sell down NNPC’s positions in joint ventures to minority stakes and “close out” outstanding divestments in order to boost production.

The “hidden value” for Seplat in the Exxon deal is the natural gas in the blocks, according to Brown, whose firm is already one of the largest domestic suppliers of the fuel to Nigerian power plants.

Brown said it’s “most likely” that most of the gas in the licenses would be destined for export, either as a third-party source for Nigeria LNG Ltd. – an expanding venture whose shareholders include Shell and NNPC that is short of feedstock – or via a separate floating production facility.