Nigeria is drawing lessons from costly international oil divestment cases to protect its upstream sector, with the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, announcing the approval of 94 Decommissioning and Abandonment, D&A, plans and securing over $400 million in pre-sale liabilities.
Speaking at the NEITI Companies Forum in Lagos, the Commission’s Chief Executive, Engr. Gbenga Komolafe, said Nigeria would not allow divestments to saddle the nation with long-term financial and environmental liabilities.
He was represented by the NUPRC Deputy Director, Human Resources, Corporate Services and Administration, Efemona Bassey.
Komolafe cited examples from the North Sea, Gulf of Mexico, Canada’s Alberta region, and Australia, where decommissioning and abandonment costs have run into tens of billions of dollars, leaving governments and communities to bear the burden.
“Without a robust and enforceable framework for abandonment and decommissioning, divestment transitions can create lasting financial and environmental burdens,” Komolafe warned.
He explained that Nigeria’s Petroleum Industry Act, PIA, has given the regulator a stronger hand to enforce decommissioning responsibilities. Sections 232 and 233 of the Act place full responsibility for wells, installations, pipelines, and facilities on licensees and lessees.
“The results from 2024 speak for themselves. Over $400 million in pre-sale decommissioning and abandonment liabilities have been secured through Letters of Credit and escrow accounts,” the NUPRC boss stated.
In addition, Komolafe revealed that environmental remediation commitments worth $9.2 million have been pledged, while awaiting the gazetting of Environmental Remediation Fund, ERF, regulations.
The Commission has also made significant progress on long-term planning.
“Since April 2023, we have approved 94 Decommissioning and Abandonment plans, in strict alignment with the PIA. These approvals represent total liabilities of $4.424 billion, arising from all Field Development Plans submitted within this period, and will be remitted progressively over the production life of the respective fields,” he disclosed.
According to him, the approvals followed rigorous due diligence on acquiring entities in recent asset transfers, including deals involving NAOC, Oando Energy Resources, Equinor, Chappal Energies, Mobil Producing Nigeria Unlimited, Seplat Energies, SPDC, Renaissance Africa Energy, TotalEnergies, and Telema Energies.
The NUPRC chief stressed that the regulatory framework for domiciliation of escrow accounts has now been finalized after broad industry consultations and is awaiting gazetting by the Ministry of Justice.
Komolafe said these measures demonstrate Nigeria’s determination to avoid the mistakes of other oil-producing nations while ensuring that communities and the environment are protected during and after divestment transitions.
Source: Sweetcrude
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