News

NNPC Seeks to Discontinue Legal Action for Settlement on ExxonMobil Divestment to Seplat Energy

Written by Jerry Alomatu on June 14, 2024

News Views: 462

Abuja— The Nigerian National Petroleum Company Limited (NNPC) has filed a motion with the High Court of the Federal Capital Territory, Abuja, to discontinue its ongoing legal action against subsidiaries of Mobil Nigeria and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). This move aims to facilitate a settlement regarding the divestment of 100% interest in Mobil Producing Nigeria Unlimited (MPNU) to Seplat Energy Offshore Limited.

Background and Legal Motion

The legal motion, filed by NNPC’s counsel Afe Babalola & Co. on June 11, 2024, requests the court to strike out the suit while allowing for the possibility to relist it should the settlement process fail. The discontinuance is deemed crucial for finalizing the settlement agreement, which hinges on the withdrawal of the lawsuit.

Settlement Agreement and Economic Impact

The settlement agreement aims to resolve the dispute over the divestment of MPNU shares to Seplat Energy, a process that has been in arbitration since August 2022 following the initial suit filed on July 5, 2022. Isaika Popoola, a litigation manager at Afe Babalola & Co., detailed the history and terms of the settlement, emphasizing the importance of arbitration and mediation as per the High Court’s rules.

NNPC’s Rationale

NNPC’s counsel argued that discontinuing the suit is in the interest of justice and promotes an efficient resolution without prolonged litigation. This aligns with Order 24 of the High Court of the Federal Capital Territory Civil Procedure Rules 2018, which supports settlement over extended court disputes.

Government Intervention and Economic Loss

The motion follows President Bola Tinubu’s intervention in the NNPC-ExxonMobil dispute, which has hindered the sale of assets to Seplat. The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, highlighted the severe economic impact, noting that Nigeria lost approximately $30 billion and 480,000 barrels of crude oil per day over the past two and a half years due to the crisis.

Historical Context

The conflict began when ExxonMobil and Seplat Energy announced a $1.6 billion sales agreement in 2022. However, the deal stalled after NUPRC asserted that NNPC had exercised its pre-emption rights, leading to an extended legal battle. NNPC’s objection was based on its right of first refusal, as stipulated in joint venture agreements.

NNPC’s motion, if granted, will strike the suit from the court’s cause list, facilitating the settlement process. This development suggests a potential resolution after nearly two years of litigation, potentially adding 480,000 barrels per day to Nigeria’s crude oil production and resolving the significant financial losses incurred.

The court’s decision will be pivotal in determining whether this protracted dispute can finally reach a resolution, allowing all parties involved to proceed with the divestment and align their interests for the future.