Business

Why NUPRC Must Publish Divestment Regulations And Guidelines For IOCs, Policy Alert Explains 

Uyo, NIGERIA/Policy Alert, a non-governmental organization promoting economic and ecological justice in the Niger Delta, has called on the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to publish regulations and guidelines for divestment of oil and gas assets under the new Petroleum Industry Act 2021 regime.

The organization made the statement weekend, following the confusion that greeted the announcement that President Muhammadu Buhari had approved 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 organization’s Senior Programme Officer, Mfon Gabriel, commended President Muhammadu Buhari for reversing his previous authorization of the Strategic Purchase Agreement (SPA) after NUPRC’s initial rejection. However, it condemned the regulatory somersaults and confusion that have characterized the deal.

The statement said: “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.

“No responsible government would allow an investor to commit the kind of havoc ExxonMobil has done and just walk away” the statement added.

The organization made the statement weekend, following the confusion that greeted the announcement that President Muhammadu Buhari had approved 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 organization’s Senior Programme Officer, Mfon Gabriel, commended President Muhammadu Buhari for reversing his previous authorization of the Strategic Purchase Agreement (SPA) after NUPRC’s initial rejection. However, it condemned the regulatory somersaults and confusion that have characterized the deal.

The statement said: “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.

“No responsible government would allow an investor to commit the kind of havoc ExxonMobil has done and just walk away” the statement added.