NUPRC Approves $4.4 Billion Oilfield Decommissioning Plans, Secures $400 Million Ahead of Divestments
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has approved 94 Decommissioning and Abandonment (D&A) plans since April 2023, covering liabilities of $4.424 billion, with $400 million already secured through escrow accounts and letters of credit. NUPRC Chief Executive Gbenga Komolafe revealed this during the Nigerian Extractive Industries Transparency Initiative (NEITI) Companies Forum in Lagos, highlighting that all approvals strictly adhere to the Petroleum Industry Act (PIA) 2021.
Komolafe explained that the decommissioning liabilities would be progressively paid over the lifespan of oilfields into dedicated escrow accounts. He emphasized that recent divestment transactions drew lessons from global experiences in the North Sea, Gulf of Mexico, Canada, and Australia, to prevent financial and environmental risks from unplanned transitions. “Without a robust framework for abandonment and decommissioning, divestment transitions can create lasting burdens. Nigeria is not immune, and we must avoid costly mistakes,” he said.
The CEO highlighted several recent transfers, including NAOC to Oando Energy Resources, Equinor to Chappal Energies, Mobil to Seplat, Shell to Renaissance Africa Energy, and TotalEnergies to Telema Energies. Each transaction was evaluated based on technical capacity, financial strength, and escrow-backed obligations to ensure responsible divestment. In addition to the $400 million secured, commitments to host communities were honored, and $9.2 million was pledged for environmental remediation, pending the formal gazetting of the Environmental Remediation Fund regulations.
Komolafe further noted that escrow accounts must be domiciled in Nigeria to enhance transparency and accountability. Meanwhile, NEITI Executive Secretary Dr. Ogbonnaya Orji stressed that compliance with industry audits is mandatory. “Transparency and accountability are critical pillars for building investor confidence and strengthening citizens’ trust. Companies must fully comply with NEITI’s audit process to improve Nigeria’s business environment,” Orji said, urging timely reporting for the 2024 NEITI Industry Reports.
At the forum, industry leaders also raised concerns over overlapping demands for payments and data from multiple regulatory agencies, warning that such requirements could discourage investment in the sector. As Nigeria’s oilfield divestments continue, authorities are emphasizing a balance between financial prudence, environmental responsibility, and investor confidence.
source: arise