A framework for divesting has been designed by the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) to supervise the assessment of ministerial consent applications concerning the divestment process of Shell Petroleum Development Company of Nigeria Ltd. (SPDC).
Similar divestiture initiatives in Nigeria will likewise be governed by this structure, which consists of seven major components. This was disclosed at the NUPRC-Shell Petroleum Development Company of Nigeria Ltd. divestiture workshop on Monday in Abuja, by NUPRC Chief Executive, Mr. Gbenga Komolafe.
The proposed transfer of participating interests in the SPDC JV Assets was the main topic of discussion throughout the workshop. This includes Renaissance Africa Energy Company Ltd. purchasing all of SPDC’s issued shares.
The Nigerian Upstream Petroleum Regulatory Commission’s Chief Executive, Gbenga Komolafe, announced at the start of the exercise that the assets hold an estimated 6.73 billion barrels of oil and condensate and 56.27 trillion cubic feet of associated and non-associated gas.
Technical competence, financial capabilities, legal concerns, decommissioning and abandonment (D&A), host community trust/environmental remediation fund, industrial relations and labor issues, and data repatriation are the seven cardinal pillars of the structure that Komolafe proposed.
He clarified that under technical capability, the successor firm must exhibit a verifiable ability to run the asset energetically, and that the NUPRC will assess the potential successor’s financial viability to carry out a specified program and fulfill the liabilities associated with the assets.
He noted that the acquiring entity has to be regarded legally as a “fit and proper” person in terms of the legal framework. He also stressed the need for unambiguous documentation attesting to the settlement of outstanding obligations and legal encumbrances.
“At this due diligence meeting, we want to find a successor who not only has the necessary financial resources, but also has the technical know-how to manage these assets responsibly over their entire lifecycle,” he said.
“As regulators, we will make sure that this assessment is carried out impartially and precisely, with an emphasis on accountability and transparency.”
“Applicable decommissioning and abandonment charges must be carefully examined to ensure the fulfillment of existing commitments. The commission will ensure that the Nigerian government is not exposed to future decommissioning obligations.”
Shell stated earlier this year that it was selling its onshore assets to Rennaissance Energy, a group of around five businesses, for an estimated $1.3 billion, with future payments expected to bring the total price to $2.4 billion.
Host communities and civil society organizations have put tremendous pressure on the agreement, demanding that Shell cover the costs of any oil spills and damages in the Niger Delta.
Amnesty International joined a lengthy list of CSOs this month in demanding that the federal government stop the sale on the grounds that the necessary safeguards for environmental cleaning and human rights have not been put in place.
