The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) says it has secured over $400 million in pre-sale decommissioning and abandonment liabilities while tightening rules on oil asset transfers to protect the country from future financial and environmental burdens.
Chief Executive of the Commission, Gbenga Komolafe, made this known on Wednesday at the Nigerian Extractive Industries Transparency Initiative (NEITI) Companies Forum in Lagos. He was represented by Efemona Bassey, Deputy Director, Human Resources, Corporate Services & Administration.
Speaking on the theme, “Divestments, Liabilities, and the Impact of Ongoing Reforms on Extractive Companies in Nigeria,” Komolafe explained that Nigeria is drawing lessons from international experiences where poor divestment oversight left nations with hefty costs.
He cited the North Sea, where decommissioning is projected to cost £27 billion by 2032; the Gulf of Mexico, with costs exceeding \$9 billion; Canada’s Alberta, where more than 97,000 inactive wells now carry liabilities between C\$30 and C\$70 billion; and Australia, where Northern Oil & Gas left AU\$200 million in liabilities in 2019.
“These global lessons guided recent divestment approvals from 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,” Komolafe said. “Without a robust and enforceable framework for abandonment and decommissioning, divestment transitions can create lasting financial and environmental burdens.”
He stressed that Nigeria is addressing these risks through the Petroleum Industry Act (PIA), which places full responsibility for decommissioning, abandonment, host community development, and environmental remediation on licensees and lessees.
According to him, the Commission rigorously assessed the technical and financial capacity of acquiring companies during the 2024 divestments and secured liabilities through upfront escrow arrangements.
“The results from 2024 speak for themselves. Over US\$400 million in pre-sale decommissioning and abandonment liabilities have been secured through Letters of Credit and escrow accounts. Host Community Development Trust obligations are fully honoured, while environmental remediation commitments worth over US\$9.2 million have also been pledged,” Komolafe stated.
He added that since April 2023, the Commission has approved 94 Decommissioning and Abandonment (D\&A) plans, covering total liabilities of \$4.424 billion. These funds, he said, will be progressively remitted into designated escrow accounts over the production life of oil fields.
On escrow domiciliation, Komolafe revealed that a new regulatory framework, developed after consultations with stakeholders, is awaiting gazetting by the Ministry of Justice. He credited NEITI for ensuring transparency and disclosure in regulatory processes and the Oil Producers Trade Section (OPTS) for supporting regulations that balance industry realities with national priorities.
