Merger and acquisition (M&A) deals across Africa’s oil and gas upstream sector in 2022 have reached a new record with $21 billion worth of deals having been announced in the past nine months, following a decline since the onset of COVID-19 in 2020, according to a new study released by market intelligence company, Rystad Energy. With three months to go until the end of the year, Africa’s M&A deals across the upstream segment have increased by three times from $7 billion in 2021 and by four times from the $5.5 billion recorded in 2020, according to the research firm.
Major deals that have driven the increase in M&A spending across the continent include Eni and TotalEnergies’ creation of Azule Energy in Angola by merging exploration and production projects, Eni’s acquisition of BP’s operating interest in two gas-producing concessions in Algeria, Seplat Energy’s acquisition of Mobil Producing Nigeria Unlimited’s assets in Nigeria for $1.28 billion, Tullow Oil’s merge with Capricorn and Repsol’s sale of $4.8 billion-worth of assets to EIG in Libya and Algeria. In addition to an increase in spending, the volume of resources traded so far in 2022 has increased compared to the previous two years with this year’s traded resources standing at 3 billion barrels of oil equivalent (boe) compared to 2.4 billion boe in 2021 and 2.7 boe in 2020.
In addition, buyers are targeting producing assets in a bid to capitalize on the current increases in oil and gas prices across the globe with the share of producing resources traded increasing from 44% in 2021 to 63 per cent in 2022. With the energy transition pushing for majors to diversify their portfolios, the majority of assets offloaded in 2022 were high-emissions oil fields which accounted for 67 per cent of the deals in 2022 compared to 58 per cent in 2021. The research firm forecast spending on M&A deals to continue to expand across the continent’s upstream segment through the end of the year as Africa turns into a hive of oil and gas exploration and production activities at the back of recent massive discoveries in Namibia by TotalEnergies and Shell and increased energy demand at global scale as a result of the effects of Russian-Ukraine war and energy transition-related matters.
Recall that President Muhammadu Buhari approved Seplat Energy‘s acquisition of the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation a few months ago. He approved the transfer in his capacity as Minister of Petroleum Resources. Exxon Mobil entered into a landmark Sale and Purchase Agreement with Seplat Energy to acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Mobil Development Nigeria Inc, and Mobil Exploration Nigeria Inc, both registered in Delaware, USA. The presidency said President Buhari gave the approval in consonance with the country’s drive for Foreign Direct Investment in the energy sector and considering the “extensive benefits of the transaction to the Nigerian Energy sector and the larger economy.”
“The President, in commitment to investment drive in light of the Petroleum Industry Act, granted consent to the Share Sales Agreement, as requested by the parties to the transaction, and directed that the approval be conveyed to all the parties involved.
“Exxon Mobil/Seplat are expected to carry out operatorship of all the oil mining licenses in the related shallow water assets towards production optimization to support Nigeria’s OPEC quota in the short term as well as ensure accelerated development and monetization of the gas resources in the assets for the Nigerian economy,” a statement from the Presidency said. The president also directed that all environmental and abandonment liabilities be adequately mitigated by Exxon Mobil and Seplat. Seplat’s move to take over the asset had suffered setback after NNPC asserted a right of first refusal on the deal. Seplat Energy in July said state-owned Nigerian National Petroleum Company Limited (NNPC) Ltd. won a court decision to block its quest to purchase the entire oil assets of Mobil Producing Nigeria Unlimited (MPNU), a local unit of oil major ExxonMobil.