The Nigerian Upstream Petroleum Regulatory Commission has announced that it secured over $400m in pre-sale decommissioning and abandonment liabilities from recent oil asset divestments in a move to prevent Nigeria from inheriting costly environmental and financial burdens.
The Chief Executive of NUPRC, Gbenga Komolafe, disclosed this on Wednesday while speaking at the Nigerian Extractive Industries Transparency Initiative Companies Forum in Lagos.
Represented by the Commission’s Deputy Director of Human Resources, Corporate Services and Administration, Efemona Bassey, Komolafe said the commission drew lessons from international divestment cases, including the North Sea, where decommissioning is projected at £27bn by 2032; the Gulf of Mexico, which has cost over $9bn; and Canada’s Alberta, where more than 97,000 inactive wells carry estimated decommissioning costs of between C$30bn and C$70bn.
He explained that these experiences shaped NUPRC’s approach to recent transactions involving NAOC and Oando Energy Resources, Equinor and Chappal Energies, Mobil Producing Nigeria Unlimited and Seplat Energies, Shell Petroleum Development Company and Renaissance Africa Energy, and TotalEnergies and Telema Energies.
“Without a robust and enforceable framework for abandonment and decommissioning, divestment transitions can create lasting financial and environmental burdens. Nigeria is not immune to this challenge, and if we are to avert costly mistakes, bold steps must be taken,” Komolafe said.
According to him, the commission ensured that decommissioning and abandonment obligations were secured through upfront escrow arrangements and Letters of Credit, in line with the Petroleum Industry Act.
He added that environmental remediation commitments worth over $9.2m were also pledged. Komolafe said, “The results from 2024 speak for themselves. Over $400m 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. Environmental remediation commitments worth over $9.2m have been pledged while awaiting the formal gazetting of the ERF Regulations.”
Beyond divestments, Komolafe said the commission had approved 94 decommissioning and abandonment plans since April 2023, representing $4.42bn in liabilities to be remitted progressively into escrow accounts over the production life of oil fields.
He stressed that the commission’s efforts, supported by NEITI and the Oil Producers Trade Section, would help safeguard host communities, protect the environment, and ensure smooth transitions of oil assets in Nigeria.
“Since April 2023, we have approved 94 Decommissioning and Abandonment plans, in strict alignment with the PIA. These approvals represent total liabilities of $4.42bn, arising from all Field Development Plans submitted within this period, and will be remitted progressively over the production life of the respective fields into designated escrow accounts,” he added.
He further disclosed that the commission has addressed a long-standing concern with international oil companies regarding the domiciliation of the escrow accounts, and the regulatory framework, developed after extensive consultations with industry stakeholders, is now awaiting gazetting by the Ministry of Justice.
He acknowledged the role of NUPRC partners, NEITI and the Oil Producers Trade Section. According to him, as the moral compass of the extractive industry, NEITI has consistently ensured that NUPRC embedded transparency and disclosure in all its regulatory processes, while OPTS, the united voice of producers, has supported us in shaping regulations that balance industry realities with national priorities.
Speaking, the Executive Secretary of NEITI, Dr Ogbonnaya Orji, stated and reaffirmed that compliance with NEITI’s mandatory industry audit process is not optional but a legal obligation for all companies operating in Nigeria’s extractive industries.
Orji stressed that transparency and accountability are not only national requirements but also critical pillars for building investor confidence, strengthening citizens’ trust, and aligning Nigeria’s extractive practices with global standards.
He explained that compliance with NEITI’s audit process underpins efforts to improve Nigeria’s business environment and attract sustainable international investments, noting that the NEITI Companies Forum has become a strategic platform for forging closer partnerships with companies in the oil, gas, and mining sectors, focusing on data disclosure on company payments, beneficial ownership transparency, contract transparency, sub-national fiscal sustainability, climate change, and multi-stakeholder collaboration.
He announced that work on the 2024 NEITI Industry Reports has already commenced and will be concluded before the end of the year, urging companies to ensure full and timely compliance to meet reporting deadlines.
The Chairman of the NEITI Companies Forum, Mr Gwueke Ajaifia, described the proliferation of demands for data and payments from multiple agencies as a key factor frustrating the business environment, calling on NEITI to escalate the matter to the federal government.
The President of the Miners Association of Nigeria and Deputy Chairman of the Forum, Mr Dele Ayanleke, commended NEITI for establishing the Companies Forum and urged the agency to leverage its multi-stakeholder framework and international affiliations to ensure that the industry’s concerns are promptly addressed to restore investors’ confidence.
Adding a regional perspective, Mr Taiwo Abdel Jeleel Olasupo, who represented the South-West Zone on NEITI’s National Stakeholders Working Group, highlighted the vast mineral deposits in the South-West. He called on investors to seize these opportunities for profit and job creation in host communities.
