Alice Waters
Fri, Sep 8, 2023 8:45 AM

NNPC Raises Concerns Over the ENI-Oando Onshore Asset Divestment Deal

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NNPC Raises Concerns Over the ENI-Oando Onshore Asset Divestment Deal
The Nigerian National Petroleum Company Limited (NNPCL) has raised concerns about the ongoing onshore asset divestment deal between ENI and Oando. The NNPCL believes that the deal lacks transparency and disregards due process. In a letter to the Managing Director of Nigerian Agip Oil Company Limited, the NNPCL emphasized the need for strict adherence to vital clauses in the Joint Operating Agreement (JOA) to protect joint venture transactions. The NNPCL stated that its consent as a joint venture member was not secured before the divestment deal was initiated, which it considers a gross infraction. This article delves into the potential implications of the ENI-Oando divestment deal and its impact on the oil and gas industry in Nigeria.

The Nigerian National Petroleum Company Limited (NNPCL) has expressed concerns over the ongoing divestment deal between ENI, an Italian oil major, and Oando, a leading Nigerian energy solutions provider. In a letter sent to the Managing Director of Nigerian Agip Oil Company Limited, the NNPCL highlighted the lack of transparency and disregard for due process in the agreement.

The NNPCL clarified that while it did not object to the divestment deal, it wished to draw attention to important clauses in the Joint Operating Agreement (JOA) that might have been overlooked. These clauses, if strictly adhered to, would protect joint venture transactions both now and in the future.

The national oil company expressed its disappointment in not having its consent or blessings secured as a joint venture member before the divestment deal commenced. It viewed this oversight as ill-advised and a potential trigger for legal disputes or conflicts in the hydrocarbon exploration sector, which operates under a joint venture framework.

In the letter, the NNPCL emphasized the contractual and legal implications of the ENI-Oando divestment deal. It stated that the agreement could potentially infringe on the provisions outlined in the Joint Operating Agreement dating back to July 1991, governing the operations of the NAOC/NEPL/OOL Joint Venture.

The NNPCL highlighted that, according to the agreement, any party seeking to transfer its participating interest in the Joint Venture must obtain written approval from the other parties involved, especially from the NNPCL, which holds a significant 60% stake.

Clause 19.11 of the JOA states, "No party may assign or transfer its interest or any part thereof without the prior written consent of the other parties, which consent shall not be unreasonably withheld."

The NNPCL's letter underscored the fact that even if NAOC's divestment was considered valid, it would not automatically translate to the transfer of operatorship to Oando. Instead, the decision on a successor operator would be the responsibility of NEPL and OOL.

The NNPCL warned that the failure to obtain written consent from NEPL, its subsidiary handling upstream operations, constituted a grave breach of the JOA terms. In response, NEPL asserted its rights concerning this breach.

The divestment agreement between ENI and Oando involves the sale of ENI's stake in Nigerian Agip Oil Company Limited (NAOC Ltd). NAOC Ltd is a wholly-owned subsidiary primarily focused on onshore oil and gas exploration, production, and power generation in Nigeria.

As the NNPCL raises concerns about the transparency and due process in the ENI-Oando divestment deal, it remains to be seen how this development will impact future joint venture transactions and the overall oil and gas industry in Nigeria.

Source of content: OOO News 2023-09-08 News

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