The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) says the International Oil Companies (IOCs) have proposed 26 oil blocks to be divested to indigenous companies with 8.211 million barrels of oil reserves.
The NUPRC said it had also engaged two leading global oil and gas decommissioning consultants to carry out due diligence on the proposed 26 oil blocks to be divested.
The Commission’s Chief Executive, NUPRC, Mr Gbenga Komolafe, said this at the Industry Dialogue on IOCs Divestment of Oil and Gas Assets in Abuja on Friday.
The News Agency of Nigeria (NAN) reports that NUPRC organised the workshop to guide and consider due diligence and interrogation on compliance with the laws and processes that govern the proposed divestment of oil and gas assets.
Seplat is acquiring Mobil Oil Producing Nigeria Unlimited (MPNU), Oando is acquiring Nigeria Agip Oil Company (NAOC), Chappal Energies is acquiring Equinor, and Renaissance is acquiring Shell Petroleum Development Company (SPDC).
In his remarks, he said the blocks had an estimated total 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.
This, he said, was a significant contribution to the nation’s hydrocarbon resources.
“Additionally, 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 can easily mature them to 2P reserves.
“Additionally, the current average production from 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, standing at 643,054 barrels (NAOC-147,481 bopd, MPNU-244,268 bopd, EQUINOR-39,203 and SPDC-212,102 bpd).
“These blocks have the potential to significantly boost our national production, which will benefit all stakeholders,” he said.
He listed the names of the leading global oil and gas decommissioning consultants, including S&P Global Commodity Insights (SPGCI) and Boston Consulting Group (BCG).
Komolafe said that the consultants would also work with the Commission as independent consultants in defining all end-of-field life and abandonment legacy liabilities in compliance with divestment guidelines.
“They will also manage the operational risk across the entire asset portfolio, create a workflow for estimating total onshore decommissioning CAPEX liabilities.
“They will determine the host community’s obligations based on three per cent OPEX stipulated in the Petroleum Industry Act (PIA), benchmark best practices on asset sales, and provide case study reports that draw lessons based on best practices,” he said.
He said that the Commission’s regulatory goal was to ensure that parties in the divestment process conform to the approved divestment guidelines.
Speaking on an overview of the divestments, Mr Enorense Amadasu, the Executive Commissioner, Development & Production, NUPRC, listed the divestment framework, two options for divestments, and objectives.
The Commission’s Secretary and Legal Adviser, Mrs Olayemi Anyanechi, described Option A as a grant of ministerial consent to the divestments on the condition that entities would retain liabilities.
According to her, this is until the commission’s investigation is concluded and liabilities are allocated to the proper party.
“The divesting companies will be required to issue an undertaking to retain the liabilities until confirmation of the release by the commission of all or part of the retained liabilities.
In Option B, she said ministerial consent would not be granted until the commission had identified or assigned all liabilities to the capable parties.
“The divesting entities will be required to issue a waiver, waiving their rights to deemed consent as providers in Section 95(7)(B) of the PIA,” she said.
The Chairman, Oil Producers Trade Section (OPTS), Osagie Okunbor, and the Chairman, Independent Petroleum Producers Group (IPPG), Abdulrazaq Isa, lauded NUPRC for being transparent and clear options proposed in the divestment process.
Representatives of other parties, including Equinor, Seplat, and Agip, among others, also lauded the commission for its efforts and clarity and promised to bring feedback to the commission. (NAN)