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Shell, ExxonMobil and others prepare to divest from Nigerian oil blocks

The Nigerian government said on Friday that four international oil companies (IOCs) will divest a total of 26 oil blocks in the country.

He Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Chief Executive Officer, Gbenga Komolafe, said the proposed oil blocks belong to Nigerian Agip Oil Company, ExxonMobil (Mobil Protaining Nigeria Unlimited), EQUINOR and Shell (Shell Petroleum Development Company of Nigeria Limited).

Komolafe disclosed this during the industry dialogue on divestment in Abuja on Friday.

He said Oando is looking to acquire the assets of Eni’s NAOC, while Seplat is making a bid to take over Mobil’s assets.

Equinor’s divestment to Chappal includes a stake in the prolific Agbami oilfield and Renaissance to acquire Shell’s onshore assets.

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He explained that these blocks have a total estimated reserve of 8,211 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.

This, he said, is a significant contribution to the nation’s hydrocarbon resources.



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Additionally, Komolafe said 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 portion of P3 reserves are located in or near producing assets. This means that a competent successor could easily convert them into 2P reserves.

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“Additionally, the current average production of 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: it stands at 643,054 barrels (NAOC-147,481 bpd, MPNU-244,268 bpd, EQUINOR-39,203 and SPDC-212,102 bpd),” he said.

He added that these blocks have the potential to significantly boost national production, which would benefit all actors.

“Our regulatory objective is to ensure that parties to the divestment process comply with approved divestment guidelines. Our goal is to ensure that the companies taking charge of these blocks have the necessary financial resources and possess the necessary technical expertise to responsibly manage the blocks throughout their life cycle in accordance with good asset management practices.

“In addition, we must ensure that inherent environmental, host community and end-of-life liabilities, i.e. decommissioning liabilities, are accurately identified and assigned to the party best equipped to withstand the associated risks.

“This requires a comprehensive understanding of regulatory requirements, industry best practices and the unique challenges associated with oil and gas operations,” he said.

He added that President Bola Tinubu is committed to creating a favorable investment environment in the upstream oil industry.

As part of this initiative, he said the President has directed the commission to ensure a smooth entry and exit framework for ongoing disinvestments by IOCs.

“To this end, we have implemented robust measures to simplify regulatory procedures and remove unnecessary barriers to investment.

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“In line with the presidential directive, the commission has developed a divestment framework consisting of seven cardinal pillars, in addition to existing petroleum laws, to guide the evaluation of ministerial consent requests by divesting entities,” he added.

Furthermore, he noted that the divestment framework aims to verify compliance with current petroleum laws and the ability of the transferees to assume responsibility for developing the acquired assets.

To achieve the goals of the divestment framework, he said the commission has hired two leading global oil and gas decommissioning consultants, S&P Global Commodity Insights (SPGCI) and Boston Consulting Group (BCG) to conduct due diligence on the assets to be divested.

“One of the objectives we hope to achieve in this workshop is to ensure that the environmental, host community and end-of-life liabilities associated with these assets do not become the financial responsibility of the Federal Government of Nigeria.”

To achieve this, he noted that the commission proposes that the divesting entities accept the granting of ministerial consent for the divestments, on the condition that they retain the liabilities until the commission’s investigation is concluded and the liabilities are allocated to the appropriate party.

In this case, he said, the companies that are divested must issue a commitment to retain the liabilities until the commission confirms the release of all or part of the retained liabilities.

READ ALSO: Shell: Nigerian government develops divestment framework

Alternatively, he said the divesting entities can agree that ministerial consent will not be granted until the commission has identified and assigned all responsibilities to the capable party.

“In this situation, disinvesting entities will also be required to issue a waiver, waiving their rights to deemed consent as provided in Section 95(7)(b) of the PIA.

“Please note that the commission expects divesting parties to indicate their preferred option and issue the applicable instrument within two weeks of the date of this workshop. I want to make it unequivocally clear that the NUPRC is dedicated to ensuring that investment processes are smooth, transparent and efficient.

“The requirement to sign an undertaking or waiver is intended solely to prevent any unjustified financial obligation from being placed on the Federal Government of Nigeria. I assure you that the commission is eager to close the divestments in the shortest possible time once any of the required instruments are received,” he said.



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