The Nigerian National Petroleum Company Limited (NNPC) has filed a motion in the High Court of the Federal Capital Territory, Abuja, seeking to discontinue its ongoing legal action against several subsidiaries of Mobil Nigeria and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The motion, filed on June 11, 2024, is part of a broader effort to finalize a settlement agreement involving the divestment of 100% interest in Mobil Producing Nigeria Unlimited (MPNU) to Seplat Energy Offshore Limited.
NNPC’s application was filed by Kehinde Ogunwumiju (SAN) in the motion marked FCT/HC/BW/173/2022), exclusively obtained by Nairametrics.
Mobil Producing Nigeria Unlimited, Mobil Development Nigeria Inc, Mobil Exploration Nigeria Inc and Nigerian Upstream Petroleum were joined as respondents in the case as first to fourth respondents.
On February 25 2022, Seplat Energy Plc disclosed its plan to purchase all shares of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Delaware for $1.28 billion.
Nairametrics previously reported the NNPC Ltd announcing two weeks ago, about the signing of a settlement agreement that facilitates the divestment of ExxonMobil’s stake in Mobil Producing Nigeria Unlimited (MPNU) to Seplat Energy Plc.
This is coming two years after ExxonMobil announced its divestment plan, prompting a reaction from NNPC and leading to a legal dispute that started in February 2022.
NNPC ‘s Discontinuance Motion
In the motion, Ogunwumiju requested the court to grant leave for discontinuance and to strike out the case, with the provision to relist it should the settlement process fail.
He submitted that the NNPC filed the suit challenging ExxonMobil’s deal with Seplat on 5th July 2022 but on the 3rd of August 2022, the court referred the parties to arbitration.
He added that recently, the parties decided to settle their dispute out of court and arbitration, adding that without prejudice to the rights of the parties, they duly executed a Settlement Agreement.
According to the senior lawyer, in the Settlement Agreement, one condition for settling the dispute was that the NNPC would withdraw the suit to enable the parties to finalize the settlement process.
“In line with the agreement between the parties, the Applicant is discontinuing this suit (Suit No: FCT/HC/BW/173/2022) against the Defendants/Respondents.
“Granting this application is the only way through which the suit may be discontinued appropriately and struck out,” he submitted.
In his affidavit in support of the motion, deposed to by Isaika Popoola, a litigation manager at Afe Babalola & Co., he detailed the history of the case, the arbitration process, and the terms of the Settlement Agreement.
Popoola noted that the parties had held several meetings to resolve the dispute concerning the divestment of MPNU shares to Seplat.
The agreement includes clauses to align the interests of all parties involved and finalize the transaction.
Popoola stated that NNPC is discontinuing the suit to enable the 1stDefendant/Respondent(MPNU) and Seplat Offshore Limited to complete the transaction in respect of the Share and Sale Purchase Agreement between the 2nd and 3rd Defendants/Respondents and Seplat Energy Offshore Limited.
A share sale agreement is a legal contract between two parties that results in the transfer of shares from a company to an investor.
He submitted, “The 2nd and 3rd Defendants/Respondents executed a Share Sale and Purchase Agreement on 25th February 2022, divesting their 100% shares in the 1st Defendant/Respondent to Seplat Energy Offshore Limited.
“The Applicant was concerned that the proposed divestment breached its preferential rights in the Joint Operating Agreement between it and the 1st Respondent and filed this suit on 5th July 2022.
“On 3rd August 2022, this Honourable Court ordered the parties to maintain the status quo and referred them to arbitration.
“The parties are currently in arbitration and litigation regarding their different rights and obligations with respect to the proposed divestment.
“The Applicant and the 1st-3rd Respondents have jointly held several meetings aimed at reaching an amicable resolution of the dispute concerning the proposed divestment of the 2nd and 3rd Respondents’ shares to Seplat Energy Offshore Limited.
“Without prejudice to their respective rights, the parties duly executed a settlement agreement to guide the settlement process. The said settlement agreement is hereby attached and marked as Exhibit A.”
Terms of Settlement between Parties
As disclosed in the NNPC affidavit, the terms of the agreement signed by NNPC CEO, Mele Kyari, and MPNU Managing Director Shane Harris revealed that M.P.N.U. Shareholders agreed that Nigeria’s apex oil company must finalize its transactions with Seplat
The settlement agreement between the parties in the suit is as follows:
- M.P.N.U. Shareholders to consent to the provision by Seplat of the Share Sale and Purchase Agreement dated 25 February 2022 as amended between Mobil Development Nigeria Inc., Mobil Exploration Nigeria Inc. and Seplat to N.N.P.C. on a prejudiced basis and for the sole purpose of enabling N.N.P.C. and Seplat conclude their transaction.
- N.N.P.C. to withdraw the Interim Protective Order issued on August 3, 2022, the Interim Order of Stay issued on November 29, 2023, and the Substantive Suit in Case No FHC/HC/CV/73/22 NNPC us M.P.N. & 3 Others.
- Parties to jointly discontinue the Arbitration proceedings in respect of the transaction in the Ad-Hoc Arbitration No LCIA -235733 between N.N.P.C. τις Μ.Ρ.Ν., Μ.Ε.Ν. & M.E.D.N.I. effective at the completion of the Share Sale and Purchase Agreement between the M.P.N. Shareholders and Seplat and the Definitive Agreement between N.N.P.C. and Seplat, whichever is later,
- The M.P.N.U. Shareholders to conclude their transaction with Seplat based on their aligned positions.
- N.N.P.C. to conclude the transaction with Seplat based on their aligned positions.
Furthermore, NNPC’s legal team emphasized that the discontinuance is essential to complete the settlement process and that the application complies with Order 24 of the High Court of the Federal Capital Territory Civil Procedure Rules 2018.
NNPC’s counsel argued that the discontinuance is in the interest of justice and promotes an efficient resolution without prolonged litigation.
The court is now tasked with considering the motion, which, if granted, would mark a significant step towards resolving the longstanding dispute between NNPC, the Mobil subsidiaries, and NUPRC, enabling the parties to focus on finalizing the settlement and the divestment transaction.
Backstory
- The deal between Exxon Mobil Corporation and Seplat involved taking over ExxonMobil Nigeria’s offshore shallow water operations.
- However, NNPC decided to invoke its Right of First Refusal (RFR) regarding the sale of these assets.
- This RFR is specified in the Joint Operating Agreement (JOA) of the Joint Venture (JV), which outlines NNPC’s stance on Seplat Energy Plc’s intended purchase of the shares.
- In May 2022, the federal government declined to approve the transaction, citing overriding national interest among other reasons for its decision.
- In addition, on July 6, 2022, a judge in Abuja issued an “order of interim injunction” that prohibits Exxon from finalizing any divestment in a subsidiary that holds four licenses in Nigeria.
- Nairametrics reports that President President Tinubu later met with the president of ExxonMobil, Liam Mallon, and other executives, assuring the team of a quick resolution of the agreement between ExxonMobil and Seplat.
(Nairametrics)
