The Nigerian National Petroleum Company Limited has faulted ENI’s planned onshore asset divestment deal with Oando.
The National Oil Company said in a letter that its consent as a member of the joint venture member operating ENI’s onshore asset, was not obtained before the planned divestment to Oando.
This, the NNPCL stated, was against contract rules governing the joint venture operation, and could affect the deal.
In a letter to the Managing Director of Nigerian Agip Oil Company Ltd, dated September 4, the NNPCL said if the deal goes through, it would have far-reaching contractual/legal implications in relation to the joint Operating Agreement dated July 1991 governing the operations of the NAOC/NEPL/OOL Joint venture.
The letter was signed by Ali Muhammed Zarah, Managing Director of NNPC E&P Limited.
Recall that Italian oil major Eni issued a press release saying that it had signed an agreement with Oando, an energy solutions provider listed on both the Nigerian and Johannesburg Stock Exchange, for the sale of all its stake in Nigerian Agip Oil Company Ltd (NAOC Ltd), a wholly-owned subsidiary focusing on onshore oil & gas exploration and production in Nigeria, as well as power generation.
But the NNPC Ltd argued that by virtue of the agreement, a party seeking to transfer part or the whole of its participating interest in the Joint Venture is obligated to seek the prior written consent of the other parties, especially since it controls 60 percent of the stake.
The letter reads, “Clause 19.11 of the JOA provides that “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,”
“We have highlighted the above provisions of the JOA to underscore the point that the purported assignment, even if valid, should by no means translate to transfer of operatorship to OOL. if NAOC’s divestment turns out to be valid, it will be incumbent on NEPL and OOL to decide on a successor operator,”
The NNPC Ltd in the letter, said the failure to obtain the written consent of its NEPL, its subsidiary that handles upstream operations constituted a “grave breach of the terms of the JOA, and NEPL reserves its rights in relation to the said breach.