The Ministry of Petroleum Resources, NUPRC, and NNPC Ltd have collectively rejected a proposed bill to create the National Commission for Decommissioning Oil and Gas Installations, citing concerns over redundancy and potential disruption to investor confidence in Nigeria’s recovering oil and gas sector.
The position, delivered at a public hearing organized by the House of Representatives Committee on Petroleum Resources (Upstream), warned that the bill has the tendency to scare away investors at a time when Nigeria is witnessing renewed interest in its petroleum industry.
In his submission, the Minister of State for Petroleum Resources, Dr. Heineken Lokpobiri, said that contrary to assumptions by lawmakers, creating a commission for decommissioning and abandonment would not address any community issues as this was already being taken care of by the Host Community Development Trust Fund, which has generated nearly 400 billion naira for community development projects.
Dr. Lokpobiri noted that Nigeria has been recording new Final Investment Decisions and witnessing renewed activities in upstream, midstream, and downstream operations, developments that were stagnant for over a decade before the current administration. He stressed that creating a new agency to handle decommissioning and abandonment will duplicate the responsibility already vested in the NUPRC as provided by Sections 232 and 233 of the Petroleum Industry Act 2021. He advised the committee to step down the bill, citing that a predictable and stable legal framework attracts investors.
The Commission Chief Executive of the NUPRC, Engr. Gbenga Komolafe, said creating a different commission to handle decommissioning and abandonment is not in alignment with global best practices, where decommissioning and abandonment is domiciled with the upstream regulator. Speaking as a subject matter expert, he explained that the issue of decommissioning is not a stand-alone affair and would lead to having a separate regulator dealing with Field Development Plan and a different agency handling decommissioning and abandonment. This arrangement, he warned, will make the NUPRC not have full line of sight on the FDP as decommissioning and abandonment is an integral part of any FDP and will jeopardize the intended objective of the development plan.
Engr. Komolafe noted that between 2014 and 2021, capital expenditure for oil and gas investment declined by about 75 percent due to the lack of a stable legal and regulatory framework until the emergence of the PIA. He aligned with the position of the minister and stated that Nigeria has now put in place the PIA, and tinkering with it will send wrong signals to the international community that the country has again started to create an unstable framework which will be a disincentive to investments.
The Executive Vice President, Upstream, NNPC, Mr. Udobong Ntia, agreed with the minister and the CCE that there was no need for the establishment of a new agency. Ntia noted that decommissioning and abandonment are not a regular exercise but an activity that takes place at the end of the life of a field which could take years. He questioned what such a commission would be doing when the NNPC, for instance, has no decommissioning and abandonment until 2045.
The Chairman of the House Committee on Petroleum Resources (Upstream), Hon. Alhassan Ado Doguwa, said the bill was conceived in order to address local environmental issues and challenges within oil producing communities.
Source: championnews.com.ng