May 30, 2024

NUPRC commences evaluation of Shell’s onshore divestment in Niger Delta, vows due diligence

0

Ilenre Irele

Nigerian Upstream Petroleum Regulatory Commission, NUPRC, has begun the evaluation of the divestment processes of Shell’s 75-year-old onshore assets to Renaissance company, the new investors.

Recall that Shell in January disclosed that it had reached an agreement to sell its onshore assets in the Niger Delta region to Renaissance and focus on Deepwater and Integrated gas investments.

Renaissance Africa Energy Company Limited is a consortium of five companies comprising four exploration and production companies based in Nigeria and an international energy group.

In the wake of the agreement reached by Shell to sell its Nigerian onshore subsidiary, the Shell Petroleum Development Comed (SPDC), to Renaissance, The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has unfurled its divestment framework consisting of pillars to guide the assessment of applications for ministerial consent for divestment.

The SPDC JV assets are currently operated by the SPDC on behalf of its Joint Venture (JV) partners namely NNPCL Limited and Total Upstream Nigeria Limited, Nigeria Agip Oil Company and SPDC. The SPDC JV OMLs were originally awarded as Oil Exploration Licence -1(OEL-1) on 1 January 1949 covering the whole of southern Nigeria and Cameroon. Ultimately, the assets were converted to OMLs on 1 April 1962 and subsequently renewed in 2014 and 2018 for 20 years.

Renaissance is a consortium of five companies made up of ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin. Dr.Olufemi Omoyele, an analyst told EnergyDay that Renaissance has much it takes to wear the mantle left behind by SHELL. ” I think Renaissance has a very good prospect and capacity to do what SHELL was doing in Nigeria.”

Gbenga Komolafe, the chief executive of the Nigerian Upstream Petroleum Regulatory Commission in the beginning of the exercise, stated that the assets hold a combined estimated volume of 6.73 billion barrels of oil and condensate, and 56.27 trillion cubic feet of associated and non-associated gas.

“Our goal is clear at this due diligence meeting: to identify successor who not only possesses the requisite financial resources but also demonstrates the technical expertise to responsibly manage these assets throughout their lifecycle”, Komolafe said, adding, “as regulators, we will ensure that this evaluation is conducted with precision and impartiality, with a focus on transparency and accountability.”

He said, “We must ensure that the inherent environmental and end-of-life liabilities i.e. decommissioning liabilities are accurately identified, and assigned to the party best equipped to bear the associated risks. This necessitates a comprehensive understanding of regulatory requirements, industry best practices, and the unique challenges inherent in oil and gas operations.

“Additionally, these assets hold reserves estimated at 2.85 billion barrels of oil, 850.85 million barrels of condensate, 11.3 trillion cubic feet of associated gas and 12.26 trillion cubic feet of Non-Associated Gas.

“Permit me to emphasize that the NUPRC is committed to free entry, free exit business principles aimed at encouraging investors in the sector. We understand the importance of providing a stable regulatory framework that instills confidence and encourages investment. To this end, we have implemented robust measures to streamline regulatory procedures and eliminate unnecessary barriers to investment.”

The regulator would also look at other issues like the seller’s labour relations and liabilities to workers, if any, and the obligations to host communities.

According to Komolafe, the Shell JV assets were originally awarded as Oil Exploration Licence 1 (OEL-1) on January 1949 covering the whole of southern Nigeria and Cameroon and were converted to OMLs in 1962 and subsequently renewed in 2014 and 2018.

Leave a Reply

Your email address will not be published. Required fields are marked *