Indigenous oil coys must demonstrate technical capacity, financial strength, others to tap into divestment by IOC—NUPRC

Nigerian Upstream Regulatory Commission, NUPRC, has said that indigenous  companies must demonstrate technical capacity, financial strength to tap into the opportunities offered by the divestment by international oil companies. The NUPRC also said that such companies must show commitment toward decommissioning and abandonment, show the status of Host Community Trust Fund obligations and ensure robustness of successor entity’s social inclusion programme in line with the provisions of the Petroleum Industry Act, 2021 (PIA). The upstream regulator further stated that such companies must further show succession plans, targeted at preventing labour crisis and instability as well as readiness to ‘repatriate’ data utilised back to the National data Repository (NDR) in line with extant regulations.

Specifically, the NUPRC, which regulates activities in the sector, stated “The successor entity must demonstrate proven and verifiable capacity to operate the asset vigorously and in a business-like manner. The entity must showcase competencies and capabilities comparable to or surpassing those of the divesting entity. In addition, all production allocation and cost issues related to unitisation in the case of straddled fields must be resolved. The Commission shall assess the prospective successor entity’s balance sheet and financial viability and verify readiness to undertake defined work programme and fulfil required obligations on the assets. Due diligence shall be undertaken on potential buyers to assess suitability, alignment with state interests, reputation, investment objectives, and track record etc. “The acquiring entity must be ‘fit and proper’ persons in the eyes of the law and in line with the interest of the nation. 

“Clear evidence of the resolutions of legacy debts and legal encumbrances must be established and appropriate mechanisms to manage residuals agreed. Decommissioning and Abandonment costs must be diligently assessed and ensure settlement of outstanding obligations. Commission to ensure that potential exposure of the Nigerian government to decommissioning liabilities is averted. The Commission shall assess the status of Host Community Trust Fund obligations and ensure the robustness of the successor entity’s social inclusion programme in line with the provisions of the Petroleum Industry Act, 2021 (PIA). The Commission shall evaluate the acquiring entity’s adherence to decarbonisation plans and sound Environmental Social & Governance (ESG) principles. The Commission shall implement a robust assessment mechanism to avert undesirable labour union issues and disharmony arising from the divestment process. Concerned parties shall endorse a Certificate of Settlement” to validate alignments reached on all labour issues (staff welfare, benefits, entitlements as well as disengagement, redundancies, retirement etc.).

“The aim is to ensure the nation averts socio-economic disruptions arising from failure to resolve labour issues that might result as a consequence of and post divestment. The Commission shall ensure that all data mined during the operating life of the asset are repatriated to the National Data Repository (NDR) in line with extant regulations.”