Business

FG To Divest 26 Oil Blocks Of 8.211m Barrels Reserves 

NUPRC has engaged two prominent global oil and gas decommissioning consultants to conduct due diligence on these proposed divestments.

By Musa Ibrahim

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has announced that International Oil Companies (IOCs) have proposed the divestment of 26 oil blocks to indigenous companies, containing 8.211 million barrels of oil reserves.

NUPRC has engaged two prominent global oil and gas decommissioning consultants to conduct due diligence on these proposed divestments.

NUPRC’s Chief Executive, Mr. Gbenga Komolafe, made this announcement during the Industry Dialogue on IOCs Divestment of Oil and Gas Assets in Abuja.

The workshop, organized by NUPRC, aims to provide guidance and scrutiny on compliance with laws and processes governing the proposed divestment of oil and gas assets.

Notable acquisitions include Seplat acquiring Mobil Oil Producing Nigeria Unlimited (MPNU), Oando acquiring Nigeria Agip Oil Company (NAOC), Chappal Energies acquiring Equinor, and Renaissance acquiring Shell Petroleum Development Company (SPDC).

Mr. Komolafe noted that the blocks collectively hold an estimated total reserve of 8.2 million barrels of oil, 2,699 million barrels of condensate, 44,110 billion cubic feet of associated gas, and 46,604 billion cubic feet of non-associated gas, representing a substantial addition to the nation’s hydrocarbon resources.

“Additionally, these blocks contain P3 reserves estimated at 5,557 million barrels of oil, 1,221 million barrels of condensate, 14,296 billion cubic feet of associated gas, and 13,518 billion cubic feet of Non-Associated Gas.

“It is worth noting that a substantial part of the P3 reserves is located in or near producing assets. This means that a competent successor can easily mature them to 2P reserves.

“Additionally, the current average production from these blocks is 346,290 barrels per day (bpd) (NAOC-28,018 bpd, MPNU-159,378 bpd, EQUINOR-36,155 bpd, and SPDC-122,739 bpd).

“But the technical production potential is much higher, standing at 643,054 barrels (NAOC-147,481 bopd, MPNU-244,268 bopd, EQUINOR-39,203 and SPDC-212,102 bpd).

“These blocks have the potential to significantly boost our national production, which will benefit all stakeholders,” he said.

He provided the names of prominent global oil and gas decommissioning consultants, which encompassed S&P Global Commodity Insights (SPGCI) and Boston Consulting Group (BCG).

Komolafe mentioned that these consultants would collaborate with the Commission as independent advisors to delineate all end-of-field life and abandonment legacy liabilities in alignment with divestment guidelines.

“They will also manage the operational risk across the entire asset portfolio, create a workflow for estimating total onshore decommissioning CAPEX liabilities.

“They will determine the host community’s obligations based on three per cent OPEX stipulated in the Petroleum Industry Act (PIA), benchmark best practices on asset sales, and provide case study reports that draw lessons based on best practices,” he said.

He mentioned that the Commission’s regulatory objective was to ensure adherence to the approved divestment guidelines.

Providing an overview of the divestments, Mr. Enorense Amadasu, the Executive Commissioner, Development & Production, NUPRC, outlined the divestment framework, two divestment options, and objectives.

Mrs. Olayemi Anyanechi, the Commission’s Secretary and Legal Adviser, described Option A as granting ministerial consent to divestments with the condition that entities retain liabilities until the Commission concludes its investigation and assigns liabilities to the appropriate party.

“The divesting companies will be required to issue an undertaking to retain the liabilities until confirmation of the release by the commission of all or part of the retained liabilities.

In Option B, she said ministerial consent would not be granted until the commission had identified or assigned all liabilities to the capable parties.

“The divesting entities will be required to issue a waiver, waiving their rights to deemed consent as providers in Section 95(7)(B) of the PIA,” she said.

Osagie Okunbor, Chairman of the Oil Producers Trade Section (OPTS), and Abdulrazaq Isa, Chairman of the Independent Petroleum Producers Group (IPPG), commended NUPRC for its transparency and the clear options presented in the divestment process.

Representatives from other parties, such as Equinor, Seplat, and Agip, among others, also praised the commission for its endeavors and clarity, pledging to provide feedback to the commission.

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