Nigeria’s petroleum regulator has handed major oil and gas companies seeking to leave the heavily polluted Niger Delta a deal: carry out voluntary clean-up and pay communities in exchange for a speedy divestment.
The offer means majors such as Exxon Mobil and Shell that aim to exit Nigeria’s onshore oil can get quicker approval to do so if they take responsibility for spills rather than wait for authorities to apportion blame, the regulator said on Friday.
The offer means oil giants like Exxon Mobil and Shell seeking to exit Nigeria’s onshore fields can secure faster approval by taking responsibility for cleaning up spills, according to the petroleum regulator’s announcement on Friday. This bypasses the lengthy process of assigning blame by authorities.
“We have the undertaking here. The consent here though fixed for June, could be much shorter,” Nigerian Upstream Petroleum Regulatory Commission (NUPRC) chief executive Gbenga Komolafe offered at a meeting with the companies in Abuja, according to Reuters.
“If you agree to take that option, you sign the undertaking knowing that there are obligations to be fulfilled.”
Heavily Polluted Niger Delta
In the last four years, oil giants ExxonMobil, Shell, TotalEnergies, and Eni have announced plans to leave offshore fields in the Niger Delta after decades of operations that have devastated the environment and impacted local communities.
It is typically hard for communities to get compensation for environmental damage caused by oil spills and gas flaring, as an example.
The companies attribute their exit to security concerns like theft and sabotage, as well as a shift towards cleaner energy. However, analysts suggest that recent legal victories for affected communities suing these companies in European courts may also be a contributing factor, as it makes clear there will be greater accountability.
A new petroleum industry law enacted in 2021 requires oil companies abandoning their assets to set up a “decommissioning fund.”
The companies’ exits have been delayed by regulatory hurdles. The NUPRC on Thursday cited the requirement for setting aside money for decommissioning, host community development and environmental remediation.
Deal or No Deal?
After delays, the regulator signalled this week that approvals will be completed soon for the companies to divest. Shell is selling its onshore shallow water operations to Renaissance, while ExxonMobil which is selling to Seplat for $1.28 billion. Eni is selling its onshore fields to Oando.
The NUPRC said companies have the option of a faster approval if they commit to cleaning up spills and compensating communities.
The second long-term option involves waiting for NURPC to identify and assign all liabilities, potentially delaying the final approval until August.
The companies said they would review the options and will respond soon.
“As a commission, we don’t want our nation to carry unwarranted financial burdens arising from the operations of the assets over time by the divesting entities,” Mr Komolafe had earlier said on Thursday.
The accelerated option could cost oil majors millions of dollars for cleanups and reparations.
The regulator said the departure of the majors means a total of 26 onshore blocks are on offer, holding an estimated reserve of 13.76 billion barrels of oil, 2.70 billion barrels of condensate, and about 90,717 billion cubic feet of gas.
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