All articles in the Farm in, Farm Out Section:

By the Editorial Board of Africa Oil+Gas Report

The public exhibition of disagreement between various agencies of the Nigerian government over the ExxonMobil/Seplat Energy share acquisition reinforces a troubling image for the country’s investment climate.

In the space of three hours, three press releases had gone out to the media, two of them declaring that ministerial consent had been granted and one clearly saying ‘no’ with some ambiguity.

In the afternoon of August 8, 2022, a press statement by the media aide to President Muhammadu Buhari declared that the president, as Minister of Petroleum Resources, had “consented to the acquisition of ExxonMobil shares in the United States of America by Seplat Energy Offshore Limited”.

That statement, coming from the office of the highest office in the land, seemed so sacrosanct that industry watchers were declaring victory for orderly exit of International Oil Companies from the Nigerian E& sector.

A ministerial consent for E&P asset sale, delivered in six months, would be one of the fastest in Nigeria’s recent history.

The content of the statement from the Presidency was the core material in the news stories by global news agencies Bloomberg and Reuters.

Seplat Energy’s external affairs directorate corroborated the Presidency statement, but in what must be seen as an important data point, the company’s statement declared it had received “a letter from the Honourable Minister of State for Petroleum Resources notifying Seplat Energy that His Excellency, President Muhammadu Buhari has graciously approved that Ministerial Consent be granted to Seplat Energy Offshore Limited’s cash acquisition of the entire share capital of Mobil Producing Nigeria Unlimited from its shareholders, Mobil Development Nigeria Inc and Mobil Exploration Nigeria Inc, being entities of Exxon Mobil Corporation registered in Delaware, USA (ExxonMobil).

So there. There had been a statement from the presidency and a letter from the Minister of State for Petroleum.

But just about the close of business, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) sent out a statement that at once contradicted those from the Presidency and the Minister of State but left open, doubts as to the conclusion of the transaction. “The Chief Executive of the NUPRC Engr. Gbenga Komolafe clarified that the Commission in line with the provisions of the Petroleum Industry Act 2021 is the sole regulator in dealing with such matters in the Nigerian upstream sector”, the Commission stated, adding, “the issue at stake is purely a regulatory matter and the Commission had earlier communicated the decline of Ministerial assent to ExxonMobil in this regard. As such the Commission further affirms that the status quo remains”.

Even as the Commission talked of commitment “to ensuring predictable and conducive regulatory environment at all times in the Nigerian upstream sector”, it is hard for anyone to read its statement, check with the others, and conclude that this is a “predictable regulatory environment”.

12 of the 13 companies which participated in Mozambique’s Sixth Licencing Round, launched in November 2021, were prequalified.

The only one who didn’t make it was the Nigerian owned AITEO Eastern Exploration and Production Company Limited, who was dropped for not meeting the pre-qualification requirements.

Sasol of South Africa, the only other Africa headquartered company in the bid round-apart from AITEO-made it to the next round.

The results will be announced before the end of January 2023.

The National Petroleum Institute (INP), Mozambique’s regulatory agency, says six of the pre-qualified companies are operators and the rest non-operators.

The operators include: China National Offshore Oil Corporation (CNOOC) Hong Kong Holding Limited, ENI Mozambico SPA, ExxonMobil Mozambique (Offshore) Limited, Petro-China International, Iraq FZE and TOTALEnergies Ep New Venture. Non-operating companies include RN Angoche PTE, Joint Stock Company Novatek, Qatar Petroleum Mozambique Limited, Sasol Africa (PTY) Limited, ONGC Videsh Limited and Discover Exploration Limited.

Three years after it first announced a deal to sell all its Nigerian assets, Panoro ASA has finally got it done. The Nowegian minnow has completed the sale of its fully owned subsidiaries Pan-Petroleum Services Holdings BV and Pan-Petroleum Nigeria Holding BV to PetroNor E&P ASA for an upfront consideration of $10Million plus a contingent consideration of up to $16.67Million based on future gas production volumes.

The Divested Subsidiaries hold 100% of the shares in Pan-Petroleum Aje Limited (“Pan Aje”), which participates in the exploration for and production of hydrocarbons in Nigeria and holds a 6.502% participating interest, with a 16.255% cost bearing interest, representing an economic interest of 12.1913% in Offshore Mining Lease no. 113 (OML 113). Following completion of the Transaction Panoro has no operational presence remaining in Nigeria.

“The upfront consideration of $10Million is expected to the paid within fifteen business days via the allotment and issue of 96,577,537 new PetroNor shares”, the company explains in a release. “The volume of PetroNor shares issued to Panoro has been determined with reference to the contractually determined 30-day volume weighted average price (VWAP) of PetroNor’s shares which are listed on the Oslo Børs with the Ticker “PNOR””.

Once the Consideration Shares are issued and received, Panoro will implement steps to distribute these new PetroNor shares to Panoro shareholders as a dividend in specie. Panoro will communicate separately in due course the timetable for this process and key dates.

Following receipt of the Consideration Shares, Panoro will temporarily hold a 6.78% shareholding with voting rights in PetroNor, until such Consideration Shares are distributed in specie to Panoro shareholders.

Nigeria has awarded Petroleum Prospecting Licences (PPLs) for 37 undeveloped discoveries (aka marginal fields) in the country’s prolific Niger Delta Basin.

At a glittering ceremony witnessed by over 300 guests in Abuja, the country’s political capital, 37 of the 57 oil and gas fields offered in a bid round launched two years ago were issued with the PPLs, having satisfied all conditions for award.

As of the date of the ceremony on June 28, 2022, 41 fields had been fully paid for, but four of those fields are having one challenge or the other in terms of partner relationships for the fields’ development.

Each of the 57 fields on offer was provisionally awarded to more than one company and each group of  “potential awardees” were meant to set up a Special Purpose Vehicle (SPV), some incorporated joint venture (IJV) that will then operate the fields.

The Nigerian Upstream Petroleum Regulatory Commission NUPRC, which is superintending the award exercise, has said that those who had not paid signature bonus as of February 2022 were deemed to have been disqualified.

As 41 fields have been duly paid for, there are 16 fields that are still open, in varying degrees, for awards.

Timipre Sylva, Nigeria’s Minister of State for Petroleum, gushed with pride as he spoke at the ceremony. “The implementation of the Petroleum Industry Act (PIA 2021) is in top gear”, he declared, referening the new petroleum regulation that governs the industry. “Consequently, the new awardees should note that their assets will be fully governed by the provisions of the PIA 2021”.

Mr. Sylva told the awardees to “ensure that good oilfield practice is employed, environmental considerations and community stakeholders’ management are not neglected”, as they develop their assets. “It is my strong belief that the awardees would take advantage of the current attractive oil prices to bring these fields into full production within a short period to increase production, grow reserves and reduce cost of production.

By Joe-Jamola Mthembu, in Abuja

Nigeria will wrap up its most contentious hydrocarbon lease sale on June 28, 2022, when the regulator expects to issue Petroleum Prospecting Licences (PPL) to Special Purpose Vehicles (SPVs) formed by the winners of the marginal field bid round.

“We are focused on delivering the end result- issuance of PPL to awardees of the marginal fields before June ending”, says Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission.  “It is going to be an impressive ceremony where awardees, National Assembly representatives, Officials from Oil Producing States, Delegates from Host Communities, Executives of the Nigerian Extractive Industry Transparency Initiative (NEITI), Representatives of the Oil Producers Trade Groups: OPTS and IPPG, aside members of the press will be present”, he explains. “Yes, we’ve progressed very fast and in deliberate manner as promised the nation”.

The NUPRC has hosted a joint review of the model license and model contract with the respective SPVs for alignment and concurrence and is currently incorporating the feedback into the model license and model contract to finalize the documents. Collation of the deed documents and preparation of the deed package are expected to have been finalized by 23rd and 24th June, 2022, thus enabling the contract signing and PPL issuing ceremony to happen on 28th June, 2022.

The licence award ceremony will cap a two-year, drawn-out process, fraught with significant challenges and ringing allegations of ‘bribe-for-field’ involving state officials. It was, until now, the least transparent hydrocarbon property sale in the country’s history. The bids were launched on June 1, 2020 by the (now defunct) Department of Petroleum Resources (DPR), with the bidding expected to close in September 2020, after which, six- months -at the most- the winners should have been announced, who, after payment of signature bonus, would have had their contracts finalised.

NUPRC meets the press: Part of the obstacles that the new regulator faced, it says, was that it had to conclude stakeholder consultations on draft regulations of the PIA, from which it would generate Model Licences and Leases, that would facilitate issuance of the licences to the Awardees who formed SPVs as required in the 2020 bid round guidelines.

There was not to be any licence awards. The provisions to grant licences to bid winners came with the passage of the Petroleum Industry Act (PIA), which itself came into being in August 2021, fourteen months after the launch of the bid round.

The NUPRC, which succeeds the DPR, came into being in September 2021.

Awardees have, however been clamouring for the license as far back as November 2021, as there can be no clear sight to development finance and field visit without a licence.

Marginal field rounds differ from other acreage lease sales because the fields are undeveloped discoveries located in acreages operated by some companies. To start work on a marginal field, an awardee has to engage with the party that operates the acreage from which the marginal field is carved out and ringfenced. Full due diligence can only be carried out with access to full field data, which cannot be accessed without a licence.

Even so, part of the obstacles that the NUPRC faced was that it had to conclude stakeholder consultations on draft regulations of the PIA, from which it would generate Model Licences and Leases, that would facilitate issuance of the licences to the Awardees who formed SPVs as required in the 2020 bid round guidelines.

At the most recent meeting with the winners, the NUPRC noted that it expected there is now a contract in place between the S.P.V member companies. The agency also noted that:

• Non performing S.P.V member shares can be reassigned, due to lack of performance, cash call e.t.c. S.P.V member contracts should also include such clauses.
• PPL is for three (3) years with an optional extension by the commission based on work done or on-going.
• Performance Security (Amount and process) is still been reviewed, though it will be a one-off for the 3 year PPL term, covering the work program to first oil. Yearly work program will not require performance security only presentations to the commission.
• Exploration rights belong to the commission, they would guide the work done and activities process, this is to endeavor that work is continually on-going on the asset.

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