Sophia Turner
Thu, Sep 7, 2023 9:15 PM

Nigerian State Oil Firm Claims Eni Breached Joint Operating Agreement in Onshore Oil Asset Deal

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Nigerian State Oil Firm Claims Eni Breached Joint Operating Agreement in Onshore Oil Asset Deal
The Nigerian state oil firm, NNPC, has accused Eni, an Italian oil major, of breaching their joint operating agreement by not obtaining consent before announcing a deal to sell onshore oil assets to local firm Oando. The transaction, which was announced on Monday, has faced scrutiny due to the difficulties international oil majors have encountered in selling onshore oil and gas assets in Nigeria. Although NNPC confirmed that the letter did not object to the transaction, it emphasized that Eni's failure to seek its prior written consent violated the joint operating agreement.

In a recent development, the Nigerian National Petroleum Corporation (NNPC) has alleged that Eni, an Italian multinational oil and gas company, breached their joint operating agreement by announcing, without prior consent, the sale of onshore oil assets to a local firm named Oando.

The sale, which was announced on Monday, has highlighted the challenges faced by international oil majors in Nigeria when it comes to divesting onshore oil and gas assets. It has also raised concerns about the speed at which such transactions are completed.

In a letter dated September 4, NNPC emphasized that its subsidiary, Nigerian Agip Oil Company (NAOC), did not seek the corporation's consent before announcing the deal. The letter further highlighted that obtaining prior written consent was mandatory before transferring participating interest in a joint venture.

Failure to acquire consent, as stated in the joint operating agreement, constitutes "a grave breach" of the agreement, according to NNPC.

Eni, known for commenting on matters related to its subsidiary, has not yet made any comments.

Speaking on behalf of NNPC, spokesperson Garba Deen Muhammad confirmed the letter sent by NNPC Exploration and Production Ltd (NEPL) to NAOC. However, he clarified that the letter did not raise any objections to the transaction. Instead, it highlighted important clauses in the joint operating agreement to ensure compliance and protect the transaction now and in the future.

Oando, the local firm involved in the deal, declined to comment directly on the letter. However, it expressed confidence that NAOC would address the concerns raised by NEPL.

Oando also clarified that Eni had not assigned its 20% interest in the NAOC joint venture to Oando. Rather, Eni had signed an agreement to sell 100% of the shares of NAOC, subject to regulatory approvals and due diligence.

Efficiently concluding asset sales is crucial for attracting investment into Nigeria's onshore oil and gas assets. However, legal and regulatory challenges have hindered similar deals in the past, such as ExxonMobil's attempted asset sale to Seplat, a local firm.

In recent years, Nigeria, which is typically Africa's largest oil exporter, has faced obstacles in maintaining consistent production levels due to factors like theft and underinvestment. The prevalence of oil spills, ongoing conflicts with local communities, and reduced exploration budgets have further complicated matters. As a result, numerous international oil majors, including Shell and Exxon, are engaged in ongoing efforts to sell their onshore assets in Nigeria.

Source of content: OOO News 2023-09-07 News

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