NUPRC Secures $400m in Decommissioning Liabilities to Safeguard Nigeria’s Oil Sector
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has announced that it has secured more than $400 million in pre-sale decommissioning and abandonment liabilities from recent oil asset divestments—an unprecedented move to shield Nigeria from inheriting crippling environmental and financial burdens.
Chief Executive of NUPRC, Gbenga Komolafe, disclosed this on Wednesday at the Nigerian Extractive Industries Transparency Initiative (NEITI) Companies Forum in Lagos. Represented by the Commission’s Deputy Director of Human Resources, Corporate Services and Administration, Efemona Bassey, Komolafe said the commission was determined to ensure that Nigeria avoids the costly mistakes witnessed in other global oil regions.
Drawing lessons from international precedents, Komolafe cited the North Sea—where decommissioning is projected at £27 billion by 2032—the Gulf of Mexico, which has already cost over $9 billion, and Canada’s Alberta, which is saddled with more than 97,000 inactive wells with liabilities estimated between C$30 billion and C$70 billion.
“These examples show what happens when divestments are not backed by robust frameworks for abandonment and decommissioning,” he said. “Nigeria cannot afford such a legacy burden. That is why we are taking bold and proactive steps.”
He explained that the Commission’s approach to recent transactions—including those involving NAOC and Oando Energy Resources, Equinor and Chappal Energies, Mobil Producing Nigeria Unlimited and Seplat Energies, Shell and Renaissance Africa Energy, and TotalEnergies and Telema Energies—was shaped by these global lessons.
According to Komolafe, the Commission secured decommissioning and abandonment obligations upfront through escrow arrangements and Letters of Credit in line with the Petroleum Industry Act (PIA). Environmental remediation commitments worth over $9.2 million were also pledged.
“The results from 2024 speak for themselves,” he noted. “Over $400 million in pre-sale liabilities have been locked down through Letters of Credit and escrow accounts, Host Community Development Trust obligations are being honoured, and environmental remediation commitments worth $9.2 million are in place pending gazetting of the ERF Regulations.”
Beyond divestments, Komolafe revealed that since April 2023, NUPRC has approved 94 decommissioning and abandonment plans valued at $4.42 billion, which will be progressively remitted into escrow accounts over the production life of oil fields. He also confirmed that longstanding concerns over escrow domiciliation have been resolved, with a regulatory framework now awaiting final approval by the Ministry of Justice.
The NUPRC boss applauded the support of NEITI and the Oil Producers Trade Section (OPTS), noting that their collaboration has ensured transparency, stakeholder input, and balanced regulation.
In his remarks, NEITI’s Executive Secretary, Dr. Ogbonnaya Orji, reinforced the importance of transparency and accountability, stressing that compliance with NEITI’s mandatory industry audits is not optional but a legal requirement. “Transparency builds investor confidence, strengthens public trust, and aligns Nigeria with global best practices,” Orji said.
He confirmed that work on the 2024 NEITI Industry Reports is underway and urged companies to comply fully and on time to avoid setbacks.
Also speaking, Chairman of the NEITI Companies Forum, Mr. Gwueke Ajaifia, decried the proliferation of multiple data and payment demands from various agencies, calling on NEITI to escalate the issue to the federal government.
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Adding further perspective, President of the Miners Association of Nigeria and Deputy Chairman of the Forum, Mr. Dele Ayanleke, praised NEITI for creating the Companies Forum and encouraged it to leverage its international partnerships to address industry concerns and restore investor confidence.
From the South-West, Mr. Taiwo Abdel Jeleel Olasupo, a member of NEITI’s National Stakeholders Working Group, highlighted the region’s vast untapped mineral wealth, calling on investors to take advantage of opportunities for wealth creation and job growth in host communities.
With these moves, stakeholders agree that NUPRC’s firm stance on decommissioning and NEITI’s transparency drive are helping Nigeria avert future liabilities, strengthen environmental stewardship, and build a more sustainable and competitive extractive sector.
