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Mobil, Shell, others get conditions for divesting 26 oil blocs

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The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) yesterday tabled two conditions for divesting 26 oil blocs from four International Oil Companies (IOCs) to four indigenous firms.

The Chief Executive of NUPRC, Engr. Gbenga Komolafe, told Mobil Oil Producing Nigeria Unlimited (MPNU) Shell Petroleum Development Company (SDPC), Nigerian Ship Oil Company (NAOC), and EQUINOR that they would have to grant ministerial consent to divestments on the condition to retain the liabilities until the conclusion of NUPRC investigation for liabilities to be allocated to the proper party.

In the alternative, the IOCs could agree that ministerial consent would not be granted until the Commission has identified and assigned all liabilities to the capable party.

Komolafe gave the conditions in Abuja during an interactive session with industry players on the divestment.

“The Commission is proposing that the divesting entities should either agree to the grant of ministerial consent to the divestments, on the condition that they will retain the liabilities until the Commission’s investigation is concluded and the liabilities are allocated to the proper party,” he said.

“In this case, 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.

“Alternatively, the divesting entities can agree that ministerial consent will not be granted until the Commission has identified and assigned all liabilities to the capable party.

“In this situation, the divesting entities will also be required to issue a waiver, waiving their rights to deemed consent as provided in Section 95 (7) (b) of the PIA.”

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NUPRC advised the divesting parties to indicate their preferred option and issue the applicable instrument within two weeks of the date of this Workshop.”

The first option, said Komolafe, would lead to the conclusion of the divestment exercise next month while the second option could culminate in the completion of the exercise in August.

He later told reporters that the “difference between the two is the fact that one would take a shorter time and the other one would take a longer time.”

Continuing, he said: “Given the fact that we need to conduct a proper due diligence in line with this divestment regulatory framework that we have put in place, we have assured the industry, we came with the leading global experts that we are working with for the approval of Mr. President to ensure that the financial liability arising from legacy operations of the assets are transparently determined for the financial body which we don’t want the nation to undertake.”

He said yesterday’s dialogue with the stakeholders was to shed more light and consider due diligence and interrogation on compliance with the laws and processes governing the proposed divestment of oil and gas assets by the IOCs to indigenous companies.

The 26 blocs billed for divestment, he said, have an estimated total reserve of 8.211million 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 said: “This is a significant contribution to the nation’s hydrocarbon resources.

“Additionally, these blocs 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.

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“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.

“Additionally, the current average production from these blocs is 346,290 barrels per day (bpod) (NAOC-28,018 bopd, MPNU-159,378 bopd, 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, MPNU-244,268 bopd, EQUINOR-39,203 and SPDC-212,102 bopd).”

He said the blocs have the potential to significantly boost national production for the benefit of all stakeholders.


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