Follow Us on Google
By Uche Usim
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), at the weekend, explained why the planned divestment deal of Shell Petroleum Development Company (SPDC) has not received regulatory approval to bring it to a successful conclusion.
The Commission, in a statement, said that Shell must receive a written Ministerial Consent which officially and legally permits it to transfer its shares in the oil and gas assets to the new owners, which is a consortium of five local oil and gas firms.
NUPRC’s Chief Executive, Gbenga Komolafe, explained: “The Commission invites the general public to take notice that the assets purported to have been sold by the divesting companies cannot be deemed sold yet, as the Commission is currently carrying out due diligence on the transaction to ensure that the divestment does not result in unwarranted liabilities for the Federal Government of Nigeria”.
The Commission also referenced some reports about ongoing discussions suggesting plans by certain International Oil Companies (“Divesting Companies”) have completed the sale of some of their oil and gas assets to some indigenous Nigerian companies.
The Commission clarified that oil and gas assets in Nigeria can only be transferred in accordance with the requirements spelt out in the provisions of the Petroleum Industry Act 2021, and the Guidelines and Procedures for obtaining Minister’s Consent to the Assignment of Interest in oil and Gas Assets, 2021 (together with the “Applicable Laws”).
“Under the Nigerian law, while the entering into of a Sale and Purchase Agreement (SPA) between an assignor and an assignee constitutes an agreement to sell the relevant licence or lease in accordance with the terms of the SPA, the transfer can only be consummated upon the grant of Ministerial Consent to the transfer, following a recommendation from the Commission, and satisfaction of the conditions for the grant of the consent by the Minister,”, the statement added.
NUPRC further noted that the Commission’s recommendation to the Minister to grant Ministerial Consent for the transfer of a licence or lease would be based on a detailed and diligent review of the transaction by the Commission to confirm it meets certain fundamental criteria.
Apart from ensure the acquirers have the requisite competence in technical and financial ramifications, fulfillment of decommissioning and abandonment obligations, the Commission said they must also have the capacity to ensure sustainability of environmental, social and corporate governance, including compliance with host community obligations, industrial and labour relations framework.
Other key criteria include confirmation that there were no legal encumbrances hindering the consummation of the transaction and that the acquirers were fit and proper persons acceptable to the Federal government to carry on business in Nigeria.
“These are criteria for the continued operational efficiency and effectiveness in the operations of the assets to ensure a sustainable increase in Nigeria’s oil and gas reserves and production,” the CCE said.
He said all the divesting companies and their potential assignees were currently complying with the relevant requirements of the law regarding the divestment process under the Applicable Laws and the Commission following a public notice issued to them.
The acquiring consortium of Shell’s assets are; ND Western Limited, FIRST Exploration and Petroleum Development Company Limited, the Waltersmith Group, and a foreign partner, Aradel Holdings Plc and the Petrolin Group.
