The National Nigerian National Petroleum Company Exploration and Production Limited (NEPL) a subsidiary of the NNPCL has questioned the alleged divestment of National Agip Oil’s (NAOC) participating interest in OMLs 60, 61, 62 and 63 to Oando Oil Limited.
This was even as it said the NAOC had failed to seek and obtain the mandatory pre-divestment written consent and approval from it before making such a move.
The NEPL in a letter addressed to the Managing Director, (NAOC) and signed by the Managing Director, Exploration and Production Limited Ali Zarah, said if the purported divestment turns out to be true, this would be a breach of the Joint Operating Agreement (JOA).
“It called attention to Clause 19.1.1 of the JOA which 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.
“By virtue of this provision, 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.”
NEPL also maintained that Agip had failed to inform it of any proposed assignment of its participating interest to OOL or any other party nor did it seek and obtain the mandatory pre-divestment written consent and approval from NEPL in accordance with Clause 19.1.1. of the JOA.
“Our attention has been drawn to various reports circulating on different media platforms in relation to an alleged divestment of NAOC’s participating interest in OMLs 60, 61, 62 and 63 to Oando Oil Limited (OOL). A duly signed press statement allegedly emanating from OOL dated 4” September 2023 affirms the fact that NAOC has assigned its entire twenty (20) percent participating interest in the said OMLs to OOL.
“Whilst we are yet to confirm the authenticity of the said divestment, we would like to note that the purported assignment, if true, would have the following far-reaching contractual/legal implications in relation to the Joint Operating Agreement (JOA) dated July 1991 governing the operations of the NAOC/NEPL/OOL Joint Venture (JV).
“It is imperative for you to note that failure to obtain NEPL’s prior written consent and approval with regards to the alleged transfer of your interests in the joint assets constitutes a grave breach of the terms of the JOA and NEPL reserves its rights in relation to the said breach – including NEPL’s entitlement to invalidate the purported assignment to OOL.
“Under the terms of the JOA, assignment of interest has implications on the transfer of operatorship. Clause 2.4.1(i)(c) of the JOA provides that the Operator shall cease to be Operator and shall be removed by the Non-Operators if the Operator assigns or otherwise disposes of, other than to an Affiliate, all its Participating Interest.
“Furthermore, Clause 2.6.1 provides that in the event of cessation of operatorship arising from the above circumstance, the parties shall appoint one of the Non-Operators as successor operator, it explained.
While highlighting the above provisions of the JOA, it said this is to underscore the point that the purported assignment, even if valid, should by no means translate to the transfer of operatorship to OOL.
It stressed that if NAOC’s divestment turns out to be valid, it will become incumbent on NEPL and OOL to decide on a successor operator.
“Please note that as holders of sixty (60) percent participating interest in the NEPL/NAOC/OOL JV, we are indeed concerned that the entire purported assignment was executed without due compliance with the terms of the JOA.
“We expect that all parties to the JOA will observe and comply with the terms of the JOA.
“In view of the foregoing, we request NAOC’s confirmation to NEPL, the authenticity or otherwise of the reported divestment to enable us to determine our next steps with regards to the management/operations of the assets,” it said.
Meanwhile, NNPC Spokesperson, Mr.Garba Deen Muhammad said the Company was not against the divestment.
His words:” pls note that it is not an objection to the transaction.
“NEPL is only drawing attention to certain important clauses in the JOA, which might have been overlooked in error. Adherence to those clauses will protect the transaction now and in the future.”
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