The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has unveiled a set of conditions that International Oil Companies (IOCs) must meet for their divestment deals to receive approval from the commission.
Outlined in the released conditions are several key areas including technical capacity, financial capability, legal compliance, decommissioning and abandonment plans, host community trust, industrial relations, and data repatriation.
Mr. Gbenga Komolafe, the Chief Executive of NUPRC, emphasized the commission’s commitment to ensuring a fair and transparent divestment process. He stated that while NUPRC supports companies interested in divestment, adherence to due process is paramount.
In terms of technical capacity, the commission requires the successor entity to demonstrate sufficient capability to operate the asset effectively, surpassing that of the divesting company. Issues related to production allocation and costs, particularly in straddled fields, must be addressed.
Financial assessment involves scrutinizing the prospective successor entity’s balance sheet and readiness to undertake defined work programs and fulfill asset-related obligations. Due diligence on potential buyers will evaluate their suitability, alignment with state interests, reputation, and track record.
Legal requirements mandate that acquiring entities must be deemed ‘fit and proper’ under the law and aligned with national interests. Resolutions of legacy debts and legal encumbrances must be provided.
Decommissioning and abandonment plans require diligent assessment of applicable costs and settlement of outstanding obligations to avert potential liabilities for the Nigerian government.
The commission will evaluate the status of Host Community Trust Fund obligations and the robustness of the successor entity’s social inclusion program in accordance with the Petroleum Industry Act, 2021 (PIA).
Additionally, adherence to decarbonization plans and Environmental Social & Governance (ESG) principles will be assessed to ensure sustainability.
To prevent labor disputes, NUPRC will implement a robust assessment mechanism and endorse a “Certificate of Settlement” on all labor issues, aiming to avert socio-economic disruptions.
Regarding data repatriation, the commission ensures that all data collected during the asset’s operational life are repatriated to the National Data Repository (NDR) in compliance with regulations.
NUPRC’s framework aims to streamline the divestment process while safeguarding national interests and promoting transparency and accountability within the Nigerian oil sector.
