NUPRC Unveils Regulatory Framework for Asset Divestment in Oil and Gas Sector
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has released the terms and conditions necessary for asset divestment, outlining the commission’s role and the due diligence processes that exiting International Oil Companies (IOCs) must adhere to for approval by the commission.
As mandated by the Petroleum Industry Act (PIA), the Nigerian Upstream Petroleum Regulatory Commission governs activities within the upstream value chain, ensuring efficiency and operational excellence by regulating technical and operational activities in the Nigerian upstream sector.
In a statement obtained by The Energy Republic, the NUPRC detailed the key requirements for approval of asset divestment deals for companies seeking to purchase assets from International Oil Companies, a significant topic in the Nigerian oil and gas industry.
Asset divestment has become prominent recently, with International Oil Companies announcing exits from Nigerian onshore and shallow water terrains due to operational and legal issues, resulting in the sale of assets to indigenous companies.
For instance, in February 2022, Seplat Energy Plc reached an agreement to acquire the entire share capital of Mobil Producing Nigeria Unlimited from Exxon Mobil Corporation, Delaware, for $1.28 billion, involving the acquisition of ExxonMobil Nigeria’s entire offshore shallow water business.
Similarly, in January 2024, Shell agreed to sell its Nigerian onshore oil business, Shell Petroleum Development Company of Nigeria Limited (SPDC), to a consortium of local companies for over $1.3 billion, marking a significant transition in a crucial yet contentious aspect of the energy giant’s global operations.
If approved by the Nigerian government, the deal would realize Shell’s long-standing objective of disengaging from a challenging operating environment in the Niger Delta, where the company has faced longstanding disputes with local communities over oil spills and allegations of human rights violations.
More recently, TotalEnergies CEO Patrick Pouyanne expressed the company’s intention to sell its minority stake in a major Nigerian onshore oil joint venture, following Shell’s divestment. The Shell Petroleum Development Company of Nigeria Limited (SPDC), in which TotalEnergies holds a 10% stake, has grappled with numerous onshore oil spills due to theft, sabotage, and operational issues, leading to costly repairs and high-profile legal battles over the years.
“We want to divest our share of SPDC, and we are looking to reshape the portfolio,” Pouyanne stated at TotalEnergies’ annual results presentation.
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Addressing asset divestment at the recently concluded 7th edition of Nigeria International Energy Summit 2024, the Chief Executive of NUPRC, Engr. Gbenga Komolafe, emphasized that while the NUPRC does not aim to obstruct companies interested in purchasing these assets from IOCs, adherence to due process is crucial.
According to him, the companies, also known as the ‘successor entity,’ interested in acquiring assets from IOCs must demonstrate Technical Capacity, Financial Capability, Fulfilment of Legal Requirements, Decommissioning and Abandonment Plan, Host Community Trust Fund, Industrial Relations, and Data Repatriation.
