•Secures over $400m in pre-sale obligations 

•Commission vows to ensure safeguarded divestment, smooth assets sale transition 

•Compliance with industry audits mandatory, says NEITI

Emmanuel Addeh in Abuja and Peter Uzoho in Lagos

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) yesterday disclosed that it has approved 94 Decommissioning and Abandonment (D&A) plans since April 2023, representing total liabilities of $4.424 billion, arising from all Field Development Plans (FDPs) submitted within this period.

The commission stated that this was done in strict alignment with the Petroleum Industry Act (PIA) 2021, explaining that these liabilities would be remitted progressively over the production life of the respective fields into designated escrow accounts.

The Chief Executive of the commission, Gbenga Komolafe, who made the disclosure during his remarks at the Nigerian Extractive Industries Transparency Initiative (NEITI) Companies Forum in Lagos, explained that over $400 million in decommissioning liabilities had already been secured by the organisation.

Maintaining that the NUPRC under him was setting stricter rules for recent asset transfers, Komolafe who was represented by the Deputy Director, Human Resources, Corporate Services & Administration, Efemona Bassey, noted that Nigeria was applying lessons from costly global divestment cases to safeguard its oil and gas sector.

Komolafe spoke on the theme: “Divestments, Liabilities, and the Impact of Ongoing Reforms on Extractive Companies in Nigeria,” a statement in Abuja by NUPRC’s Head of Media and Strategic Communications, Eniola Akinkuotu stated.

The NUPRC chief said the commission had drawn lessons of divestments from the North Sea, where decommissioning was estimated at £27 billion by 2032; the Gulf of Mexico costing over $9 billion and in Canada’s Alberta, where more than 97,000 inactive or abandoned wells now carry an estimated decommissioning and abandonment cost of between C$30 billion and C$70 billion.

In Australia, Komolafe stated that Northern Oil & Gas Australia in 2019 left behind liabilities of more than AU$200 million.

He stated that the lessons from these experiences guided the recent divestment approvals from NAOC to Oando Energy Resources; Equinor to Chappal Energies; Mobil Producing Nigeria Unlimited to Seplat Energies; SPDC to Renaissance Africa Energy; and TotalEnergies to Telema Energies.

He added: “Without a robust and enforceable framework for abandonment and decommissioning, divestment transitions can create lasting financial and environmental burdens.

“Nigeria is not immune to this challenge, and if we are to avert costly mistakes. It is precisely to avoid this outcome that Nigeria, through the Petroleum Industry Act and subsequent regulatory actions, has taken bold and decisive steps.”

The NUPRC boss highlighted Nigeria’s response to the recent divestments in line with Sections 232 and 233 of the PIA which place full responsibility for the decommissioning and abandonment of petroleum wells, installations, structures, utilities, plants, and pipelines on licensees and lessees.

According to him, each of the 2024 divestments provided a critical opportunity to put the commission’s divestment framework to test and action, rigorously assessing the technical capacity of acquiring entities, verifying their financial strength, and securing decommissioning and abandonment obligations through upfront escrow arrangements.

Komolafe said, “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. Host Community Development Trust (HCDT) obligations are fully honoured. Environmental remediation commitments worth over $9.2 million have been pledged while awaiting the formal gazetting of the ERF regulations.”

The CCE said beyond the significant progress achieved through the divestment framework, it was important to highlight another milestone.

“Since April 2023, we have approved 94 D&A 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 into designated escrow accounts,” he added.

He further disclosed that the commission has addressed a long-standing concern with the International Oil Companies (IOCs) regarding the domiciliation of the escrow accounts; and the regulatory framework, developed after extensive consultations with industry stakeholders, is now awaiting gazetting by the Ministry of Justice.

 In addition to divestments, the commission, he said, has been working with operators on life extension projects, ranging from facility integrity audits to subsea upgrades and enhanced reservoir management measures that sustain safe production, delay decommissioning, and reduce environmental risks.

Also at the forum, NEITI reaffirmed that compliance with its mandatory industry audit process is not optional but a legal obligation for all companies operating in Nigeria’s extractive industries.

Speaking at the opening session, the Executive Secretary of NEITI, Dr. Ogbonnaya Orji, stressed that transparency and accountability are not only national requirements but also critical pillars for building investor confidence, strengthening citizens’ trust, and aligning Nigeria’s extractive practices with global standards.

Orji explained that compliance with NEITI’s audit process underpins efforts to improve Nigeria’s business environment and attract sustainable international investments, a statement by the organisation’s Director of Communication & Stakeholders Management, Obiageli Onuorah, noted

He noted that the NEITI companies forum had become a strategic platform for forging closer partnerships with companies in the oil, gas, and mining sectors, focusing on: data disclosure on company payments and beneficial ownership transparency.

Besides, Orji listed contract transparency; sub-national fiscal sustainability as well as climate change, and multi-stakeholder collaboration as some of the reasons for the platform.

He announced that work on the 2024 NEITI Industry Reports had already commenced and will be concluded before the end of the year, urging companies to ensure full and timely compliance to meet reporting deadlines.

Also, the Chairman of the NEITI Companies Forum, Mr. Gwueke Ajaifia, described the proliferation of demands for data and payments from multiple agencies as a key factor frustrating the business environment. He called on NEITI to escalate the matter to the federal government.

The President of the Miners Association of Nigeria and Deputy Chairman of the Forum, Mr. Dele Ayanleke, commended NEITI for establishing the Companies Forum and urged the agency to leverage its multi-stakeholder framework and international affiliations to ensure that the industry’s concerns are promptly addressed to restore investors’ confidence.

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