Nigeria's NUPRC Offers Faster Approval for Oil Majors Exiting Onshore Fields

2024-05-03 22:21:26

Naija247news

ABUJA, May 3 - Nigeria's regulatory body, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), has proposed a quicker approval process for major oil companies aiming to exit Nigeria's onshore oil fields if they take responsibility for spills, bypassing the need for authorities to apportion blame, the regulator announced on Friday.

Exxon Mobil (XOM.N), Shell (SHEL.L), TotalEnergies (TTEF.PA), and Eni (ENI.MI) have expressed intentions to withdraw from Nigeria's oil-rich Niger delta due to security concerns such as theft and sabotage, opting to focus on deepwater drilling. However, regulatory obstacles have prolonged their exit plans.

During a meeting in Abuja with the companies, NUPRC chief Gbenga Komolafe proposed a short-term option for faster approval, contingent on the companies committing to spill clean-up and community compensation.

"We have the undertaking here. The consent here though fixed for June, could be much shorter," stated Komolafe. "If you agree to take that option, you sign the undertaking knowing that there are obligations to be fulfilled."

The alternative long-term option entails awaiting NURPC's identification and assignment of all liabilities, potentially delaying final approval until August.

NURPC aims to balance the expeditious exit of oil majors with environmental protection, community welfare, and asset sustainability.

The companies are currently evaluating the proposed options and are expected to respond soon.

Analysts suggest that the accelerated option could incur significant costs for oil majors, including expenses for clean-up operations and reparations.

"The risk with option 1 is the transferor will continue to take responsibility for the asset until the process is completed while option 2 puts them at the mercy of the regulator since they waived their right to deemed approval," commented Ayodele Oni, an energy lawyer at Lagos-based Bloomfield law firm.

The departure of these major oil players leaves 26 onshore blocks available for potential acquisition, holding substantial reserves of oil, condensate, and gas, according to NUPRC.

"We aim to ensure that the companies that take over these blocks have the necessary financial resources and possess the technical expertise required to responsibly manage the blocks throughout their lifecycle in accordance with good asset stewardship practices," added Komolafe.

NUPRC has enlisted the services of two global oil and gas decommissioning consultants, S&P Global Commodity Insights and Boston Consulting Group, to conduct due diligence on the assets earmarked for divestment.

2024-05-03 News