Seplat to become major producer with MPN’s assets

ExxonMobil joins deepwater migration

Sopuruchi Onwuka

Indigenous independent energy firm, Seplat Energy Plc, is on track to finalizing the much awaited acquisition of shallow offshore production assets of Mobil Producing Nigeria (MPN) Unlimited, positioning it to become a major hydrocarbon liquids producer and unassailable gas factor in the Nigerian petroleum industry.

American oil multinational, ExxonMobil, declared on February 25 that it only awaits regulatory approval to seal a full package divestment deal with indigenous Seplat Energy Plc.

The deal will enable London listed Seplat Energy Plc secure the full joint venture portfolio currently operated by MPN Unlimited in partnership with the Nigerian National Petroleum Company (NNPC) Limited.

Seplat which is currently diversifying into multiple business spheres in the energy industry acquires the new offshore assets for special purpose Seplat Energy Offshore Limited.

The Oracle Today reports that ExxonMobil remains Nigerian petroleum industry’s offshore champion, with operated production assets almost exclusively located in shallow water and deep offshore terrains of the Niger Delta Basin.

According to updated notes on operations of MPN, the production assets cover over 90 offshore platforms comprising about 300 producing wells hosted in four oil mining licenses with joint capacity for over 550,00 barrels a day (b/d) of crude, condensate and natural gas liquids (NGL).

The operations of ExxonMobil in Nigeria appear to have prioritized liquids production, as the American company holds very low gas monetization profile in the country where it reinjects nearly all the associated gas to raise reservoir pressure for oil production.

President of ExxonMobil Upstream Oil and Gas, Liam Mallon, stated in a statement that the company has reached agreement to sell its equity interest in MPN “to Seplat Energy through its wholly-owned Seplat Energy Offshore Limited.”

The deal would transfer all the 40 percent interest currently held by MPN to Seplat, and rest the prevailing concerns over intentions of NNPC Limited to exercise its preemptive rights to secure greater stakes in the JV. It is not immediately clear whether Seplat would also succeed MPN as operator of the venture.

The deal, at consummation, would scale up the status of Seplat to a critical indigenous producer by pushing its gross operated output to over 600,000 barrels of wellhead hydrocarbon liquids per day.

With its critical midstream processing facilities, pipelines infrastructure and growing share in the domestic market, acquisition of MPN stakes would also enable Seplat harness associated gas from the MPN’s shallow water fields for the first time and deliver more volumes into the domestic and regional gas markets.

Mallom said the divestment to indigenous firm would naturally fit into the government’s plans to grow local content in exploration and production by providing asset basis for sustainable operations. He said Exxonmobil would concentrate its Nigerian operations in the deepwater.

“This sale will allow us to prioritize competitively advantaged investments in our strategic assets, and it supports the Nigerian government’s efforts to grow its oil and gas operations.

 “We value the relationships we have spent decades building with the government and people of Nigeria, which will continue as we maximize the value from our deepwater operations,” Mallon said.

He made it clear that the divestment which is expected to close later in the year after “regulatory and other approvals” would not entail sack of workers, pointing out that the company would still have sizeable deep offshore operations in the country.

“ExxonMobil will maintain a significant deepwater presence in Nigeria, including interests in the Erha, Usan and Bonga developments via Esso Exploration and Production Nigeria Limited and Esso Exploration and Production Nigeria (Deepwater) Limited,” he stated.

The Oracle Today reports that the move by ExxonMobil to limit its operations in Nigeria to deepwater falls into noticeable pattern by some big western multinational firms in the country.

Shell which began gradual sell down of its onshore and swamp assets since 2010 had earlier invited bids for its full 45 percent stake in operated joint venture operated by Shell Petroleum Development Company (SPDC) Limited in a final phase of JV investment recovery.

Chevron is also taking a similar pattern with piece meal divestment of its onshore JV assets, also focusing on the deepwater play where it operates the Agbami field.

Non-operated interests of Total and Eni in the Shell operated JV were also sold by Shell in the slew of divestments.

Currently, the deepwater hosts a cluster of commercial interests as the big players weave a network of partnerships that enable them pool resources, thin down risks, share technology and share returns.