NUPRC has secured $400M Oilfield Decommissioning Liabilities and tightened rules on asset divestments.
NewsOnline Nigeria reports that the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, says Nigeria is applying lessons from costly global oilfield divestment cases to safeguard its petroleum sector, having already secured more than $400 million in decommissioning liabilities from recent asset transfers.
Speaking at the Nigerian Extractive Industries Transparency Initiative (NEITI) Companies Forum in Lagos, Komolafe; represented by Deputy Director of Human Resources, Corporate Services & Administration, Efemona Bassey emphasized that Nigeria’s regulatory stance is designed to prevent the kind of financial and environmental burdens seen in other jurisdictions.
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He cited examples such as the North Sea, where decommissioning costs are projected at £27 billion by 2032; the Gulf of Mexico, with over $9 billion in costs; and Alberta, Canada, where more than 97,000 inactive wells carry liabilities of C$30–70 billion. Similar cases in Australia left over AU$200 million in unpaid liabilities.
“These global experiences shaped our approach to recent divestments, including NAOC’s sale to Oando Energy Resources, Equinor’s exit to Chappal Energies, Mobil Producing Nigeria Unlimited’s transfer to Seplat Energies, SPDC’s divestment to Renaissance Africa Energy, and TotalEnergies’ transfer to Telema Energies,” Komolafe said.
He stressed that Sections 232 and 233 of the Petroleum Industry Act (PIA) place full responsibility for abandonment and decommissioning on licensees and lessees, while Chapter 3 and Section 104 of the PIA impose obligations for host community development and environmental remediation.
According to him, the Commission’s Divestment Framework ensured rigorous assessments of technical and financial capacity of acquiring firms, while securing liabilities upfront via escrow arrangements and letters of credit.
“The results from 2024 speak for themselves,” Komolafe said. “We have secured over $400 million in pre-sale decommissioning and abandonment liabilities, honoured Host Community Development Trust obligations, and obtained pledges of $9.2 million for environmental remediation.”
He further disclosed that since April 2023, NUPRC has approved 94 Decommissioning and Abandonment (D&A) plans worth $4.424 billion in liabilities, which will be funded progressively into escrow accounts throughout the production life of the fields.
Komolafe added that longstanding concerns over domiciliation of escrow accounts have been resolved, with a new regulatory framework developed in consultation with industry stakeholders, now awaiting gazetting by the Ministry of Justice.
