Inside NIGER Delta
NNPC alleges contract violations in sale of OMLs 60, 61, 62, 63
Nigeria’s oil and gas sector may be in for another round of battle over the sales of Nigerian Agip Oil Company (NAOC) operating share to Oando Plc.
Coming at a time when the sale of ExxonMobil assets to Seplat Energies remained in debacle, Oando Plc had said it reached an agreement with NAOC on the acquisition of a 100 percent stake in its subsidiary that comprises oil mining leases (OMLs) 60, 61, 62, and 63, from 20 percent to 40 per cent.
While the Petroleum and Natural Gas Senior Staff Association of Nigeria immediately threatened to withdraw its members from all offices and oil fields over the purchase of assets, the Nigerian National Petroleum Company (NNPC) Limited in a letter with Reference number E8P/MD/05.23 and addressed to the managing director of NAOC said the sale violated clause 19:11 of the Joint Operating Agreement (JOA) dated July 1991 governing the operations of the NAOC/NEPL/ OOL Joint Venture.
The letter signed by Managing Director of NNPC E & P Limited, Ali Muhammed Zarah and dated 4th September 2023, said failure to obtain NEPL’s prior written consent and approval with regards to the alleged transfer of NOAC’s 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.
The letter also threatened to invalidate the assignment if the international oil company did not immediately take necessary action over the development.
“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. Also, 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
“We have highlighted the above provisions 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 become incumbent on NEPL and OOL to decide on a successor operator,” the letter said in part.
NNPC in the letter noted that as holders of 60 per cent participating interest in the NEPL/NAOC/OOL JV, the company was concerned that the entire purported assignment was executed without due compliance with the terms of the JOA.
