The year-long process by Shell Petroleum Development Company (SPDC) and its joint venture partners to divest some of their onshore assets has run into a hitch, as the Nigerian National Petroleum Corporation (NNPC) has moved to stop the sale of Oil Mining Lease (OML) 25 to Creststar consortium.
Under the latest divestment programme, Royal Dutch Shell had concluded the sale of OMLS 18, 24, 25 and 29, in addition to the Nembe Creek Trunk Line (NCTL), following a 2013 review of its business in the country.
It was learnt that Shell had signed a share purchase agreement (SPA) with the Aiteo Group, which is acquiring OML 29, the most prolific of the oil assets offered to buyers, and the Nembe pipeline.
Shell alongside its partners, Total and Eni, had also signed an SPA to sell 45 per cent in OML 18 to a consortium led by Canadian oil and gas company, Mart Resources.
Mart Resources is part of the Erotron consortium that won the bid for OML 18. Its other partners include indigenous operator Midwestern Oil and Gas and Suntrust Oil.
For OML 18, the Erotron consortium was reported to have offered $1.2 billion for the oil block; Aiteo offered $2.562 billion for OML 29 and the Nembe pipeline; Pan Ocean Corporation Nigeria Limited offered to pay $900 million for OML 24; while Crestar secured OML 25 having offered $500 million for the oil asset.
However, despite the execution of the SPAs between Shell and the buyers, the transactions would only be deemed truly sealed after a ministerial consent is granted by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, as provided by the Petroleum Act.
However gathered that the NNPC had stopped the sale of OML 25 to Crestar consortium.
Crestar defeated other competitors, including Lekoil, a consortium made up of Greenacreas Energy, CCC and Signet Petroleum, and another consortium consisting of Niger Delta Petroleum (NDPR) and South Atlantic Petroleum (SAPETRO).
Crestar consortium consists of a local content vehicle, Crestar Integrated Natural Resources Limited with 55 per cent interest and a Canadian firm, James Bay Resources, with 45 per cent stake.
Shell’s Corporate Media Relations Manager, Mr. Precious Okolobo, declined to comment on the controversy trailing the OML 25 transaction.
But a top official of the NNPC, who spoke on the condition of anonymity, said that the decision of the corporation to halt the OML 25 transaction was in accordance with the provisions of the Joint Operating Agreement (JOA), which stipulates that SPDC should give the NNPC the right of first refusal to acquire its interest before accepting Crestar’s offer.
“Article 19.4 of the JOA states that subject to Clause 19.1 and 19.2, if any party has received an offer from a third party, which it desires to accept, for the assignment or transfer of its participating interest, it shall give the other parties prior right and option in writing to purchase such participating interest as provided in sub-clauses 19.4.1 to 19.4.2,” he said.
He argued that SPDC should have obtained NNPC’s approval before going public with the OML 25 offer.
According to him, Clause 19.2 of the JOA states that “ether party may, at any time upon notice to the other parties transfer all or its participating interest to an affiliate of such party, subject to any necessary government approval.”
He could not however explain why only OML 25 transaction was singled out by the NNPC out of the four oil blocks put on offer by SPDC or why NNPC waited till at the end of the transaction before exercising its rights.
It was learnt from Crestar that Alison-Madueke might have capitalised on the provisions of the JOA to settle scores with the former Director of Department of Petroleum Resources (DPR), Mr. Osten Olorunsola, who is the chairman of the board of Crestar Integrated Natural Resources Limited.
Olorunsola was sacked as DPR director in June 2013 over an alleged disagreement with the minister on some aspects of the Petroleum Industry Bill (PIB).
Olorunsola’s Technical Committee on PIB was alleged to have refused to do the minister’s bidding with respect to some clauses in the reform bill.