The Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has announced that Nigeria has secured more than $400 million in decommissioning and abandonment liabilities.
He recently made the announcement as the commission enforces stricter rules on recent oil and gas asset transfers.
Speaking on Wednesday at the Nigerian Extractive Industries Transparency Initiative (NEITI) Companies Forum in Lagos, Komolafe said that the move will help protect the country’s oil and gas sector from the costly experiences of other regions.
According to a statement by NUPRC’s Head of Media and Strategic Communications, Eniola Akinkuotu, Gbenga Komolafe, represented by the Deputy Director, Human Resources, Corporate Services & Administration, Efemona Bassey, gave a speech on the theme: “Divestments, Liabilities, and the Impact of Ongoing Reforms on Extractive Companies in Nigeria.”
The commission made the decision amid the reality from the North Sea, where decommissioning costs are tipped to hit £27 billion by 2032; the Gulf of Mexico, with costs exceeding $9 billion; and Canada’s Alberta province, with over 97,000 inactive wells carrying liabilities estimated between C$30 billion and C$70 billion.
Komolafe disclosed that the latest development led to the recent divestment approvals involving major players like 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, which is why bold steps have been taken under the Petroleum Industry Act and regulatory actions to prevent costly mistakes,” he said.
He further noted each 2024 divestment was scrutinized thoroughly, including assessments of technical and financial capacity, plus upfront escrow arrangements for decommissioning obligations.
Komolafe concluded by saying that NUPRC has approved 94 Decommissioning and Abandonment (D&A) plans, which represent liabilities of $4.424 billion, since 2023.
“The results from 2024 speak for themselves. Over $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, while environmental remediation commitments worth over $9.2 million have been pledged,” he added.
Folami David is a dynamic journalist who views the world through an analytical lens, translating complex narratives across multiple industries into compelling stories. With an insatiable appetite for information and a keen eye for emerging trends, Folami specializes in uncovering the interconnections between technology, business, culture, and society.
