No official letter has come from the president suggesting otherwise, more than a week after it was claimed that President Muhammadu Buhari had withdrawn his ministerial approval for Seplat Energy’s application to purchase shares in ExxonMobil’s local business.
Last Wednesday, Seplat said it was aware of news and social media reports alleging ‘impropriety’ in the process of securing ministerial consent for the Mobil Producing Nigeria Unlimited deal, but that it was ‘wholly untrue’.
Industry experts have warned that misapplication of laws which tend to deny Seplat the opportunity could discourage investment in Nigeria in the wake of industry reform meant to grow the sector.
A $1.28 billion bid by Seplat Energy Plc for shares in Exxon’s local subsidiary was initially backed by President Buhari despite opposition from the Nigeria National Petroleum Company (NNPC) Limited, Exxon’s partner on the blocks with a total capacity of 95,000 barrels of oil equivalent a day.
Buhari, who also doubles as oil minister, was reported to have reversed his decision, citing a lack of coordination among government agencies after the regulator, the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, publicly rejected his approval.
The deal would have been established as the first major transaction to be announced since Nigeria passed the Petroleum Industry Bill, PIB, aimed at bolstering oil and gas investments after two decades of uncertainty.
The government is trying to reverse dwindling production and attract major investment into the sector that generates more than 90 per cent of export earnings.
Investors that have acquired Seplat’s shares following the approval of the deal will now be concerned about how this ends. Mariam Olabode, oil and gas analyst at Lagos-based Afrivest West Africa, said by phone: “The issue of oil theft, vandalism and insecurity along the pipelines is still there and they remain a concern to investors,” she said. “Now, we have this acquisition dispute.”
Potentially worse is the public contradiction between Nigeria’s president and its oil regulator having “a knock-on effect on other deals that are waiting on the outcome here,” said Gail Anderson, research director at consultancy Wood Mackenzie Ltd, reports Bloomberg.
