Nigerian govt’s ExxonMobil-Seplat move raises community clean-up fears

The Nigerian government’s move to eliminate the final hurdle preventing ExxonMobil from selling its local unit to Seplat, an indigenous company, has rekindled concerns about a possible failure to clean up and pay communities devastated by decades of oil production.

The Nigerian National Petroleum Company Limited (NNPC) is withdrawing its lawsuit against the sale, aiming to finalize a settlement agreement for the $1.28 billion divestment of assets from Mobil Producing Nigeria Unlimited (MPNU) to Seplat Energy Offshore Limited.

On June 11, Afe Babalola & Co., representing the NNPC, filed an application requesting a federal court to dismiss the lawsuit but asked to retain the option to reinstate it if settlement negotiations fail.

The lawsuit, initially filed in July 2022 and referred to arbitration on August 3, 2022, has been an obstacle to the transaction.

This latest development follows President Bola Tinubu’s directive, after meetings with top ExxonMobil officials, for the NNPC to remove any barriers to the deal, which has faced over two years of delays.

No hint on community cleanup

In its move to close the deal, however, the government has not made no mention of earlier conditions it gave international oil companies to first agree to execute environmental clean-up and pay compensation to communities.

A coalition of civil society groups met with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and have called on the government to halt the divestment process. They are demanding a thorough audit of the companies and their activities before approvals are given.

The NUPRC could not be reached for comments on the ExxonMobil approval.

After lengthy delays, the regulator in early May signalled that approvals would be given soon for the companies to divest. Shell is selling its onshore shallow water operations to Renaissance, while ExxonMobil which is selling to Seplat for $1.28 billion. Eni is selling its onshore fields to Oando.

The NUPRC said companies have the option of faster approvals if they commit to clean-ups and compensating communities. The second long-term option involves waiting for NURPC to identify and assign all liabilities, delaying approvals.

President Bola Tinubu, who doubles as petroleum minister, and his two junior petroleum ministers met Liam Mallon, ExxonMobil upstream president and Shane Harris, its Nigerian business’ managing director on May 28.

Heineken Lokpobiri, junior minister for oil, said “The president has given a clear directive to NNPC and me to resolve the issue of divestment, and we are doing whatever we can to achieve that.”

According to the settlement agreement between NNPC and MPNU, one of ExxonMobil’s local units, the 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,” the agreement says.

“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.”