The Nigerian government realized over $400 million from pre-sale decommissioning and abandonment liabilities from 2024 divestment in the Nigerian upstream oil sector
The Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Mr. Gbennga Komolafe, said that the amount was secured through Letters of Credit and Escrow Accounts.
Represented by the Deputy Director, Human Resources, Corporate Services & Administration of NUPRC, Efemona Bassey, on Wednesday at the Nigerian Extractive Industries Transparency Initiative (NEITI) Companies Forum, in Lagos, Mr. Komolafe said that Nigeria was applying lessons from costly global divestment cases to safeguard its oil and gas sector.
He disclosed that the Host Community Development Trust obligations was fully honoured and that the Environmental remediation commitments worth over US$9.2 million had been pledged, while awaiting the formal gazetting of the ERF Regulations.
According to him, the results from 2024 speak for themselves. Over US$400 million in pre-sale decommissioning and abandonment liabilities have been secured through Letters of Credit and escrow accounts.
“Host Community Development Trust obligations are fully honoured. Environmental remediation commitments worth over US$9.2 million have been pledged while awaiting the formal gazetting of the ERF Regulations,” he said.
Speaking on the theme, “Divestments, Liabilities, and the Impact of Ongoing Reforms on Extractive Companies in Nigeria”, the NUPRC boss said that the Commission had drawn lessons from the divestments of the North Sea, where decommissioning is estimated at £27bn by 2032, the Gulf of Mexico costing over $9bn and in Canada’s Alberta, more than 97,000 inactive or abandoned wells now carry an estimated decommissioning and abandonment cost of between C$30 and C$70bn.
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.
“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,” he added.
GIK/APA