Nigerian National Petroleum Company (NNPCL) Limited has said that its consent as a member of the joint venture member operating ENI’s onshore asset was not sought before the planned divestment to Oando.
It claimed that such a development runs contrary to contract rules governing the joint venture operation and could upend the deal.
NNPCL in a letter signed by Managing Director of NNPC E&P Limited, Ali Muhammed Zarah, to the Managing Director of Nigerian Agip Oil Company Ltd, argued that if the deal goes through, there would be contractual consequences.
It said, “It would have far-reaching contractual/legal implications in relation to the joint Operating Agreement dated July 1991 governing the operations of the NAOC/NEPL/OOL Joint venture.
“Clause 19.11 of the JOA provides that “No party may assign or transfer its interest or any part thereof without the prior written consent of the other parties, which consent shall not be unreasonably withheld.”
It stated that by virtue of this provision, a party seeking to transfer part or the whole of its participating interest in the Joint Venture is obligated to seek the prior written consent of the other parties, especially since it controls 60 per cent of the stake.
It said that going by the terms of the JOA, if the ENI disposes of its shares without recourse to the other parties, it could lose its participating interest.
“We have highlighted the above provisions of the JOA 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 be incumbent on NEPL and OOL to decide on a successor operator.
“In this instance, NAOC did not inform NEPL of any proposed assignment of its participating interest to Oando or any other party, nor did NAOC seek and obtain the mandatory pre-divestment written consent and approval from NEPL in accordance with the terms of the JOA.”
