The Nigerian National Petroleum Company Limited (NNPC) has filed a motion to discontinue its legal action against several subsidiaries of Mobil Nigeria and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The motion, filed on June 11, 2024, in the High Court of the Federal Capital Territory, Abuja, is part of a broader effort to finalize a settlement agreement for the divestment of a 100% interest in Mobil Producing Nigeria Unlimited (MPNU) to Seplat Energy Offshore Limited.
The move follows Seplat Energy Plc’s announcement in February 2022 of its intention to acquire all shares of MPNU from Exxon Mobil Corporation for $1.28 billion. The deal had sparked a legal dispute when NNPC challenged the transaction, asserting its preferential rights under a Joint Operating Agreement with ExxonMobil.
What we know
In the motion, NNPC’s legal counsel requested the court to grant leave for discontinuance and strike out the case, with a provision to relist if the settlement process fails.
The Settlement Agreement, signed by NNPC CEO Mele Kyari and MPNU Managing Director Shane Harris, includes several key terms:
- MPNU shareholders will consent to Seplat providing the Share Sale and Purchase Agreement to NNPC to finalize their transaction.
- NNPC will withdraw all interim orders and the substantive suit against MPNU and other defendants.
- The parties will jointly discontinue arbitration proceedings upon completion of the transaction.
- MPNU shareholders and NNPC will align their positions to finalize their respective transactions with Seplat.
- NNPC’s legal team highlighted that the discontinuance aligns with Order 24 of the High Court of the Federal Capital Territory Civil Procedure Rules 2018 and is crucial for the settlement’s completion.
- The court’s decision on the motion will be pivotal in resolving the longstanding dispute, enabling the parties to focus on finalizing the divestment.
The original lawsuit, filed on July 5, 2022, led to the court referring the parties to arbitration on August 3, 2022.
But recently, the involved parties opted for an out-of-court settlement, executing a Settlement Agreement that necessitates NNPC’s withdrawal of the suit to proceed with the settlement.
The motion is important as the discontinuance of the law suit is essential for completing the Share and Sale Purchase Agreement between MPNU and Seplat Energy Offshore Limited.
More Backstory
The deal between Exxon Mobil Corporation and Seplat involved the takeover of ExxonMobil Nigeria’s offshore shallow water operations.
However, NNPC decided to invoke its Right of First Refusal (RFR) regarding the sale of these assets.
- This RFR is specified in the Joint Operating Agreement (JOA) of the Joint Venture (JV), which outlines NNPC’s stance on Seplat Energy Plc’s intended purchase of the shares.
- In May 2022, the federal government declined to approve the transaction, citing overriding national interest among other reasons for its decision.
- Additionally, on July 6, 2022, a judge in Abuja issued an “order of interim injunction” prohibiting Exxon from finalizing any divestment in a subsidiary that holds four licenses in Nigeria.
Nairametrics also reported that President Bola Tinubu later met with ExxonMobil president Liam Mallon and other executives, assuring them of a quick resolution of the agreement between ExxonMobil and Seplat.
Optics: This development marks a significant step in the ongoing efforts to conclude ExxonMobil’s divestment plan announced two years ago, which has been the subject of intense legal and regulatory scrutiny.
- The court’s approval of the discontinuance could pave the way for a smoother transaction process between the involved parties.
- Seplat share price closed flat at N3,450 per share. The stock is up 49% year to date.
Note: This story has been updated to reflect new information.