FG will divest 26 oil blocks with a reserve of 8.211 million barrels

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) says international oil companies (IOCs) have proposed to sell 26 oil blocks to indigenous companies with 8.211 million barrels of oil reserves.

The NUPRC said it has also engaged two leading global oil and gas decommissioning consultants to conduct due diligence on the proposed 26 oil blocks to be divested.

The Chief Executive of the Commission, NUPRC, Mr. Gbenga Komolafe, said this on Friday during the Industry Dialogue on IOCs Divestment of Oil and Gas Assets in Abuja.

NUPRC organized the workshop to guide and consider due diligence and interrogations on compliance with the laws and processes governing the proposed divestiture of oil and gas assets.

Seplat acquires Mobil Oil Producing Nigeria Unlimited (MPNU), Oando acquires Nigeria Agip Oil Company (NAOC), Chappal Energies acquires Equinor, while Renaissance acquires Shell Petroleum Development Company (SPDC).

In his remarks, he said the blocks had an estimated total reserve of 8.211 million barrels of oil, 2.699 million barrels of condensate, 44.110 billion cubic feet of associated gas and 46.604 billion cubic feet of non-associated gas.

This, he said, was an important contribution to the country’s hydrocarbon resources.

“In addition, these blocks contain P3 reserves estimated at 5,557 million barrels of oil, 1,221 million barrels of condensate, 14,296 billion cubic feet of associated gas and 13,518 billion cubic feet of non-associated gas.

“It is worth noting that a substantial portion of P3 reserves are located in or near producing assets. This means that a competent successor can easily mature them into 2P reserves.

“In addition, current average production from these blocks is 346,290 barrels per day (bpod) (NAOC-28,018 bopd, MPNU-159,378 bopd, EQUINOR-36,155 bopd and SPDC-122,739 bopd).

“But the technical production potential is much higher – namely 643,054 barrels (NAOC-147,481 bopd, MPNU-244,268 bopd, EQUINOR-39,203 and SPDC-212,102 bopd).

“These blocks have the potential to significantly increase our national production, which will benefit all stakeholders,” he said.

He listed the names of key global advisors on oil and gas decommissioning
including S&P Global Commodity Insights (SPGCI) and Boston Consulting Group (BCG).

Komolafe said the consultants would also work with the Commission as independent consultants in defining all end-of-life and legacy obligations, in line with the divestment guidelines.

“They will also manage operational risk across the asset portfolio and create a workflow for estimating total CAPEX liabilities for onshore decommissioning.

“They will determine host community obligations based on three percent OPEX as stipulated in the Petroleum Industry Act (PIA), benchmark best practices in asset sales and provide case study reports that draw lessons from best practices “, he said.

He said the Commission’s regulatory objective was to ensure that parties in the disinvestment process adhere to the approved disinvestment guidelines.

Speaking on an overview of the disinvestments, Mr Enorense Amadasu, Executive Commissioner, Development & Production, NUPRC, mentioned the disinvestment framework, two options for disinvestments and targets.

The Secretary and Legal Advisor to the Commission, Mrs. Olayemi Anyanechi, described Option A as granting ministerial approval for the divestments, subject to entities maintaining their obligations.

According to her, this is until the commission’s investigation is completed and liabilities are assigned to the correct party.

“The businesses to be divested will be required to provide an undertaking to retain the liabilities until the committee’s confirmation of the release of all or part of the retained liabilities.

On option B, she said ministerial approval would not be granted until the commission had identified or allocated all liabilities to the capable parties.

“The divesting entities will be required to issue a waiver, waiving their rights to deemed consent as a provider under section 95(7)(B) of the PIA,” she said.

The Oil Producers Trade Section (OPTS) Chairman, Osagie Okunbor and the Independent Petroleum Producers Group (IPPG) Chairman, Abdulrazaq Isa, commended NUPRC for transparent and clear options presented in the disinvestment process.

Representatives of other parties, including Equinor, Seplat and Agip, among others, also praised the committee for its efforts and clarity and promised to provide feedback to the committee.