The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has revealed that Nigeria is leveraging lessons from costly global oil and gas divestment cases to protect its upstream sector. The regulatory body has secured over $400 million in decommissioning liabilities and implemented stricter regulations governing recent oil and gas asset transfers.
Komolafe made these disclosures during the Nigerian Extractive Industries Transparency Initiative (NEITI) Companies Forum held in Lagos on Wednesday. Represented by Deputy Director Efemona Bassey, Komolafe addressed the theme, “Divestments, Liabilities, and the Impact of Ongoing Reforms on Extractive Companies in Nigeria.”
According to the NUPRC’s Media and Strategic Communications head, Eniola Akinkuotu, Komolafe cited international precedents — including the North Sea’s £27 billion projected decommissioning cost by 2032, the Gulf of Mexico’s $9 billion liabilities, Canada’s Alberta with over C$30 billion to C$70 billion in abandonment costs, and Australia’s AU$200 million liabilities from Northern Oil & Gas Australia — as critical lessons shaping Nigeria’s regulatory approach.
“Without a robust and enforceable framework for abandonment and decommissioning, divestment transitions can create lasting financial and environmental burdens,” Komolafe emphasized. “Nigeria is not immune to this challenge, which is why the Petroleum Industry Act (PIA) and subsequent regulations have taken bold, decisive steps to safeguard our oil and gas sector.”
The NUPRC CEO highlighted recent divestment approvals from major operators including 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. These transactions were scrutinized under the Commission’s enhanced Divestment Framework, which rigorously assesses the technical and financial capabilities of acquiring companies and secures decommissioning liabilities upfront via escrow accounts and Letters of Credit.
Key provisions under Sections 232 and 233 of the PIA assign full responsibility for the decommissioning and abandonment of petroleum wells, installations, pipelines, and related infrastructure to licensees and lessees. Additionally, Chapter 3 and Section 104 of the PIA establish mandates for host community development and environmental remediation.
Komolafe reported that over $400 million has been secured in pre-sale decommissioning and abandonment liabilities, while Host Community Development Trust obligations have been fully honored. Environmental remediation commitments exceeding $9.2 million have also been pledged, pending the formal gazetting of Environmental Remediation Fund (ERF) regulations.
Since April 2023, the NUPRC has approved 94 decommissioning and abandonment plans totaling $4.424 billion in liabilities, aligned with the PIA. These liabilities will be progressively remitted over the lifespan of the respective fields into designated escrow accounts.
Komolafe addressed the longstanding issue of escrow account domiciliation by international oil companies (IOCs), revealing that a regulatory framework developed with industry stakeholders now awaits gazetting by the Ministry of Justice.
He praised NEITI and the Oil Producers Trade Section (OPTS) for their roles in promoting transparency, disclosure, and balanced regulation in Nigeria’s extractive industry.
Komolafe highlighted ongoing collaboration with operators on life extension projects, including facility integrity audits, subsea upgrades, and enhanced reservoir management.
