ExxonMobil, Shell, Others To Divest 26 Oil Blocks In Nigeria
Four major oil companies, Nigerian Agip Oil Company, ExxonMobil (Mobil Producing Nigeria Unlimited), Equinor, and Shell (Shell Petroleum Development Company of Nigeria Limited), has planned to sell off 26 oil blocks in Nigeria.
These blocks currently produce around 346,290 barrels of oil per day on average. Gbenga Komolafe, CEO of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), revealed this during a meeting in Abuja.
Komolafe said that these blocks hold an estimated total 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. He emphasized the significant role these assets play in Nigeria’s oil and gas resources.
“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 could easily mature them to 2P reserves.
“The current average production from these blocks is 346,290 barrels per day (bpd). Nigerian Agip Oil Company-28,018 bpd, Mobil Producing Nigeria Unlimited -159,378 bpd, EQUINOR-36,155 bopd and SPDC-122,739 bopd).
“But the technical production potential is much higher – standing at 643,054 barrels (NAOC-147,481 bopd, (Mobil Producing Nigeria Unlimited (MPNU)-244,268 bopd, EQUINOR-39,203 and SPDC-212,102 bopd). These blocks have the potential to significantly boost our national production, which would benefit all stakeholders,” he said.
Speaking further, the CCE noted that in line with the Presidential directive, the Commission has developed a divestment framework consisting of seven cardinal pillars in addition to the extant petroleum laws, to guide the assessment of applications for Ministerial consent by the divesting entities.
These pillars include; technical capacity, financial capacity, legal, host community trust / environmental remediation fund, industrial relations and labour issues, data repatriation, and decommissioning & abandonment.
He said that the successor entity must demonstrate proven and verifiable capacity to operate the asset vigorously and in a business-like manner. He also said that the Commission shall assess the prospective successor entity’s balance sheet and financial viability and verify readiness to undertake a defined work program and fulfill required obligations on the assets.
“The acquiring entity must in line with the interest of the nation be ‘fit and proper’ persons in the eyes of the law. Clear evidence of the resolutions of legacy debts and legal encumbrances must be established and appropriate mechanisms to manage residuals agreed upon. Decommissioning & Abandonment (D&A) Applicable D&A costs must be diligently assessed and ensure settlement of outstanding obligations. Commission to ensure that potential exposure of the Nigerian government to decommissioning liabilities is averted.
“The Commission shall assess the status of host community trust fund obligations and ensure the robustness of the successor entity’s adherence to decarbonisation plans and sound Environmental Social & Governance (ESG) principles.”
According to Komolafe,
the divestment framework is aimed at ascertaining compliance with extant petroleum laws and the assignees’ capacity to assume the responsibility of developing the assets acquired.
He added that efforts were ongoing to ensure that all divestment processes are concluded by June 2024.
“Our regulatory goal is to ensure that parties in the divestment process conform to the approved divestment guidelines. We aim to ensure that the companies that take over these blocks have the necessary financial resources and possess the technical expertise required to responsibly manage the blocks throughout their lifecycle in accordance with good asset stewardship practices.
