The Nigerian National Petroleum Company Limited, the Nigerian Upstream Petroleum Regulatory Commission, and the Ministry of Petroleum Resources have all spoken out against the bill to create the National Commission for the Decommissioning of Oil and Gas Installations, 2024.
The House of Representatives Committee on Petroleum Resources (Upstream) held a public hearing where top officials, including the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, and the NUPRC Chief Executive, Gbenga Komolafe, spoke out strongly against the proposed legislation, according to The PUNCH.
The National Union of Petroleum and Natural Gas Workers (NUPRC) said in a statement released in Abuja today and signed by Eniola Akinkuotu, the Head of Corporate Communications and Media, that the Petroleum Industry Act 2021 already covers issues related to decommissioning and abandonment. This means that creating a new agency is not needed and could even cause problems.
The National Commission for the Decommissioning of Oil and Gas assets Bill, 2024, aims to create a separate agency to manage the dismantling, removal, and restoration of oil and gas assets when they are no longer useful.
Supporters of the law say that we need a separate group to make sure the environment is safe and that abandoned infrastructure doesn’t hurt the ecosystem, especially in the Niger Delta.
But government officials said that the Petroleum Industry Act, which became law in August 2021, already sets up a complete legal and institutional framework for this kind of oversight. They also said that trying to set up a new commission could cause regulatory conflict and make people do the same job twice.
The Minister of State for Petroleum Resources argued in his submission that MPs were wrong to think that creating a Commission for decommissioning and abandonment would solve any problems in the community.
Lokpobiri also said that Nigeria has been making new Final Investment Decisions and seeing new activity in upstream, middle, and downstream operations. These were things that had been stuck for more than ten years before President Bola Tinubu’s Renewed Hope administration.
He stated, “Setting up a commission for decommissioning and abandonment wouldn’t solve any problems in the community because the Host Community Development Trust Fund is already doing that. It has raised almost N400 billion for projects that help the community.”
It would be against the law to create a new body to manage decommissioning and abandonment because the NUPRC already has that job, as stated in Sections 232 and 233 of the Petroleum Industry Act 2021.
“He said that the NC-DOGI’s creation could scare away investors.”
The minister also said that forming a new body in charge of decommissioning and abandonment would mean that the NUPRC would have to perform the same thing again, as stated in Sections 232 and 233 of the Petroleum Industry Act 2021.
He told the committee to drop the bill because a predictable and stable legal environment is good for business.
Komolafe stated in his speech that making a separate commission to deal with decommissioning and abandonment is not in line with best practices around the world, where the upstream regulator is in charge of both.
The CCE noted that, as an expert in the field, the question of decommissioning is not a separate issue. It would mean that there would need to be a different regulator for the Field Development Plan and a different agency for decommissioning and abandonment.
He went on to say, “This will make it so that the NUPRC can’t see the FDP all the way through, since decommissioning and abandonment are both important parts of any FDP and will put the development plan’s goal at risk.”
Komolafe said that from 2014 to 2021, capital spending on oil and gas investments dropped by around 75% since there was no stable legal and regulatory framework until the PIA came along.
The CCE agreed with the Honourable Minister of State for Petroleum (Oil) and said, “Nigeria has now put in place the PIA; changing it will send the wrong signals to the international community that we have again started to create an unstable framework, which will discourage investments.”
Udobong Ntia, the Executive Vice President of Upstream at NNPC, concurred with the minister and the CCE that there was no need to set up a new agency.
Ntia said that decommissioning and abandonment are not something that happen all the time; they only happen at the end of a field’s existence, which can take years.
He said, “What will such a commission do when the NNPC, for example, doesn’t have to shut down or leave until 2045?”
So, he was curious about what NC-DOGI would be doing in the meantime.
Hon. Alhassan Ado Doguwa, the Chairman of the House Committee on Petroleum Resources (Upstream), said earlier that the measure was written to deal with environmental problems and other problems in oil-producing towns.
Before issuing recommendations to the National Assembly, the House Committee on Petroleum Resources (Upstream) will look over all of the contributions from all parties.
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