‘Why NUPRC must address growing divestment issues in Nigeria’

There are looming concerns in the upstream segment of the nation’s oil and gas industry except for the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) taking proactive steps in addressing issues on divestment.

Policy Alert, a non-governmental organisation promoting economic and ecological justice in the Niger Delta, gave this warning in a release, saying the NUPRC must urgently publish regulations and guidelines for divestment of oil and gas assets under the new Petroleum Industry Act 2021 regime.

The warning follows the confusion that greeted the acquisition of shallow water assets of ExxonMobil Producing Nigeria Unlimited by Seplat Energy.

While commending NUPRC for insisting on its regulatory mandate as prescribed under the PIA 2021, the release signed by the organisation’s Senior Programme Officer, Mfon Gabriel, noted that President Muhammadu Buhari deserves commendation for reversing his previous authorisation of the Strategic Purchase Agreement (SPA) after NUPRC’s initial rejection.

However, it condemned the regulatory somersaults and confusion that characterised the deal.

To guide industry actors on the process of divestment in the PIA 2021 regime, NUPRC must publish regulations and guidelines for International Oil Companies’ divestment of assets in Nigeria.

Such a guideline must insist that all divesting companies demonstrate compliance with past and existing Memoranda of Understanding with host communities, undertake post-operation environmental and health assessment and restoration, settle outstanding judgment claims and compensation obligations to host communities, and implement a detailed decommissioning and abandonment plan, or show evidence of savings in dedicated accounts for the Decommissioning Fund, before the conclusion of any sales.

“We are aware of the environmental disasters and conflicts that have trailed earlier divestment by International Oil Companies to indigenous companies since 2010. We saw how regulators looked the other way, while indigenous oil companies, with limited technical and financial capacities, hurriedly signed off deals without considering the liabilities tied to the assets on paper. At the end, host communities still bore the brunt of those hurried deals,” Gabriel said.

According to him, no responsible government would allow an investor to commit the kind of havoc ExxonMobil has done and just walk away.