The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has disclosed that the International Oil Companies (IOCs) have put forward a proposal to divest 26 oil blocks to local companies, containing approximately 8.211 million barrels of oil reserves.
In addition, the NUPRC has enlisted the services of two prominent global oil and gas decommissioning consultants to conduct thorough due diligence on the identified 26 oil blocks slated for divestment.
During the Industry Dialogue on IOCs Divestment of Oil and Gas Assets held in Abuja, Mr. Gbenga Komolafe, the Chief Executive of NUPRC, shared these details.
The workshop organized by NUPRC aimed to provide guidance and ensure meticulous scrutiny regarding compliance with the relevant laws and procedures 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 highlighted that the identified blocks collectively hold an estimated 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, contributing significantly to the nation’s hydrocarbon reserves.
Moreover, he emphasized that these blocks also encompass 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. This reservoir potential, particularly in proximity to existing assets, presents an opportunity for efficient maturation to 2P reserves.
The current average production from these blocks stands at 346,290 barrels per day (bpd), with the technical production potential estimated higher at 643,054 barrels per day, illustrating the capacity for increased national production.
Furthermore, the engagement of leading global consultants such as S&P Global Commodity Insights (SPGCI) and Boston Consulting Group (BCG) signifies a commitment to managing end-of-field life and abandonment legacy liabilities in alignment with divestment guidelines.
The consultants will collaborate with the Commission to oversee operational risk, estimate onshore decommissioning CAPEX liabilities, define host community obligations based on regulatory stipulations, benchmark best practices in asset sales, and furnish comprehensive case study reports for knowledge sharing.
Mr. Komolafe reiterated the Commission’s regulatory objective of ensuring adherence to approved divestment guidelines throughout the process.
In a comprehensive overview of the divestments, Mr. Enorense Amadasu, the Executive Commissioner of Development & Production at NUPRC, outlined the divestment framework, two divestment options, and the associated objectives.
Mrs. Olayemi Anyanechi, the Commission’s Secretary and Legal Adviser, detailed Option A, which entails granting ministerial consent for divestments under the condition that entities retain liabilities until the Commission concludes its investigations and allocates responsibilities accordingly.
Option B, she explained, involves withholding ministerial consent until all liabilities are identified and assigned to suitable parties, with divesting entities required to waive their rights to deemed consent as outlined in the Petroleum Industry Act (PIA).
The commendations from industry stakeholders, including the Chairman of the Oil Producers Trade Section (OPTS) Osagie Okunbor and the Chairman of the Independent Petroleum Producers Group (IPPG) Abdulrazaq Isa, underscored the transparency and clarity demonstrated by NUPRC in the divestment process. Representatives from Equinor, Seplat, Agip, and other entities also expressed appreciation for the Commission’s efforts and pledged to provide constructive feedback.
