Why We Demand Stronger Scrutiny Of Exxon Mobil–Seplat Deal By Regulators — Policy Alert

Policy Alert, a civil society organisation working for economic and ecological justice in the Niger Delta, has called on the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and other regulatory agencies to scrutinize the ExxonMobil-Seplat deal and other ongoing divestments by International Oil Companies (IOCs) in the country to ensure they are done in line with extant laws and in a manner that does not further undermine the wellbeing of host communities and the environment.

ExxonMobil had announced last week that it has reached an agreement to sell its equity interest in Mobil Producing Nigeria Unlimited to Seplat Energy, a Nigerian independent oil and gas company, through its wholly-owned subsidiary Seplat Energy Offshore Limited.

This comes on the heels of similar divestment deals and discussions in recent years that have seen the IOCs moving deeper offshore and selling off their assets to domestic firms, a move that has been criticized by communities and civil society groups as amounting to an abdication of responsibility.

“The ExxonMobil-Seplat deal is another one in a wave of worrisome recent divestments,” said Policy Alert’s Senior Programme Officer, Mfon Gabriel, in a statement released this morning.

“This is the time for the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and other regulatory bodies to exercise their mandates in defense of the national interest and in a manner that protects the rights of communities and the environment.”

The statement also noted: “We find ExxonMobil’s practices highly problematic and are concerned that Seplat has rushed in to inherit such a negative legacy.

“Exxon’s current plans for reducing carbon intensity in its global operations are highly inadequate in the face of climate change and the energy transition. Its destruction of health, livelihoods, and environment of Nigerian communities where it operates has been widely deplored. The company has contributed to the vulnerability of Nigeria’s oil receipts to corruption, not least by actively working to prevent regulation aimed at improving transparency of project-level payments by US-listed extractive companies such as itself.

“Add to these tonnes of outstanding judgment debts, unresolved court cases, unsettled compensation claims by communities affected by its operations, aging infrastructure, massive clean-up obligations, and the huge task of decommissioning and abandonment ahead, and it is clear that Seplat is purchasing a really toxic and potentially explosive mix.”

It added: “If the strategy of IOCs is to move further from the reach of communities and regulatory actors by selling off its shallow water assets while remaining active in the deep offshore, they must be reminded that this ostrich-style denial cannot wish the issues away.”

While cautioning Seplat to be prepared to address a raft of economic, social, and governance (ESG) risks as it finalizes the purchase in the months ahead, the organisation called on regulatory agencies and the National Assembly to increase oversight of deep offshore operations as the theatre of action is shifting there in the near future as a result of divestments.

“Nigeria’s weak regulatory environment and poor legislative oversight is one of the biggest factors responsible for the huge ESG costs of oil extraction in Nigeria and the current wave of divestments presents not just a further ESG threat but also an opportunity for the sector’s regulators to insist that companies do the right thing before they leave and to ensure that successor firms have factored in all costs including those related to decommissioning and abandonment,” Policy Alert said.

The statement also observed that NNPC Limited shares a huge liability with its Joint Venture partners on some of these issues as a result of its equity ownership and associated infrastructure it shares on some of the divested assets, whether onshore or offshore.