ExxonMobil’s divestment of its oil business in Nigeria’s Niger Delta has been thrown into doubt after the country’s president withdrew his support for the sale less than three days after approving it.
Garba Shehu, spokesperson for Nigeria’s president Muhammadu Buhari, told the Financial Times that the $1.28bn sale of Exxon’s four oil permits to local producer Seplat Energy had been put on hold pending a further review by Nigeria’s petroleum regulator. Shehu said: “Due process must be done.”
Seplat Energy, which is listed in both London and Lagos, said it had received no official confirmation from the Nigerian government that Buhari’s approval had been rescinded, adding that it was “seeking clarification” from the authorities.
Shares in Seplat Energy were down almost 6 per cent in London on Thursday. ExxonMobil, one of the world’s largest oil and gas companies based in the US, declined to comment.
The sudden reversal by Buhari, 79, who is also the country’s oil minister, is the latest twist after his decision to approve the landmark deal.
At issue is who has the authority to approve the sale. Nigeria’s Petroleum Industry Act, signed into law by Buhari last year, introduced a new requirement that sales or transfers of oil licenses can only proceed after the oil minister has been advised by the regulator.
Gbenga Komolafe, head of the Nigerian Upstream Petroleum Regulatory Commission, said just hours after Buhari approved the sale that he did not have the power to authorise the deal.
“The issue at stake is purely a regulatory matter,” Komolafe said in a statement.
However Seplat said on Monday that Buhari’s approval had been granted under the previous version of the act, ratified in 1969, under which the licenses in question were originally signed.
The confusion not only casts doubt on Exxon’s exit but also threatens to deter future investment.
One Nigerian oil executive, who asked not to be identified, said the presidency was split, with one side favouring Seplat’s bid and the other supporting an acquisition by the state-owned Nigerian National Petroleum Corp.
NNPC, which operates the permits in partnership with Exxon, secured a court order to block the deal in July, arguing that it had a contractual right to pre-empt any sale.
Buhari appeared to have overruled the court on Monday, before changing course.
The oil executive said NNPC’s supporters inside the presidency argue that a sale to the state-oil company would be in “Nigeria’s national strategic interests”.
Seplat said it had become aware of “reports alleging impropriety in the process of securing ministerial consent to the acquisition.”
“Such reports are wholly untrue and the company will pursue legal action against any parties involved in disseminating false information related to its business,” it said in a statement.