Upstream Regulator Secures $400m In Oil Wells Closure Costs

Nigeria is leveraging planetary experiences to support its lipid and state assemblage from costly liabilities, having secured implicit $400 cardinal successful decommissioning and abandonment obligations from lipid wells, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has revealed.

The NUPRC main executive, Gbenga Komolafe, shared this milestone connected Wednesday, during the Nigerian Extractive Industries Transparency Initiative (NEITI) Companies Forum successful Lagos.

Represented by the lawman manager Efemona Bassey, Komolafe emphasised however Nigeria has drawn lessons from the fiscal burdens seen successful planetary divestment cases specified arsenic those successful the North Sea, Gulf of Mexico, Canada, and Australia, wherever decommissioning costs person escalated into billions of dollars.

“Nigeria is not immune to these challenges. To debar specified costly mistakes, the country, done the Petroleum Industry Act (PIA) and consequent regulatory actions, has taken bold and decisive steps,” helium said.

The CCE stated that the lessons from these experiences guided the caller divestment approvals from NADC to Cando Energy Resources, Equinor to Chappal Energies, Mobil Producing Nigeria Unlimited to Seplat Energies, SPDC to Renaissance Africa Energy, and TotalEnergies to Telema Energies.

The CCE said, “Without a robust and enforceable model for abandonment and decommissioning, divestment transitions tin make lasting fiscal and biology burdens.

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

The NUPRC brag highlighted Nigeria’s effect to the caller divestments, which is successful accordance with Sections 232 and 233 of the PIA, which spot afloat work for the decommissioning and abandonment of petroleum wells, installations, structures, utilities, plants, and pipelines connected licensees and lessees.

Similarly, Chapter 3 of the PIA and Section 104 found circumstantial obligations for big assemblage improvement and biology remediation, respectively.

He said each of the 2024 divestments provided a captious accidental to enactment the Commission’s Divestment Framework to the trial and action: rigorously assessing the method capableness of acquiring entities, verifying their fiscal strength, and securing decommissioning and abandonment obligations done upfront escrow arrangements.

Komolafe said, “The results from 2024 talk for themselves. Over US$400 cardinal successful pre-sale decommissioning and abandonment liabilities person been secured done Letters of Credit and escrow accounts.

“Host Community Development Trust obligations are afloat honoured. Environmental remediation commitments worthy implicit US$9.2 cardinal person been pledged portion awaiting the ceremonial gazetting of the ERF Regulations.”

The CCE said beyond the important advancement achieved done our Divestment Framework, it is important to item different milestone.

“Since April 2023, we person approved 94 Decommissioning and Abandonment (D&A) plans, successful strict alignment with the PIA. These approvals correspond full liabilities of $4.424 billion, arising from each Field Development Plans submitted wrong this period, and volition beryllium remitted progressively implicit the accumulation beingness of the respective fields into designated escrow accounts,” helium added.

He further disclosed that the Commission has addressed a long-standing interest with the IOCs regarding the domiciliation of the escrow accounts; and the regulatory framework, developed aft extended consultations with manufacture stakeholders, is present awaiting gazetting by the Ministry of Justice.

He acknowledged the invaluable relation of NUPRC partners, NEITI and Oil Producers Trade Section (OPTS).

According to him, arsenic the motivation compass of the extractive industry, NEITI has consistently guarantee d that NUPRC embedded transparency and disclosure successful each its regulatory processes portion OPTS, the agreed dependable of producers, has supported america successful shaping regulations that equilibrium manufacture realties with nationalist priorities.

He added, “In summation to divestments, the Commission has been moving unneurotic with operators, peculiarly members of OPTS, connected beingness hold projects, ranging from installation integrity audits to subsea upgrades and enhanced reservoir absorption measures that prolong harmless production, hold decommissioning, trim biology risks, and unafraid resilience crossed our mature fields.