BY SAM OTUONYE
Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has said that the assets and liabilities of Shell Petroleum Development Company of Nigeria Limited (SPDC) are up for sale to the most qualified investor.
The Commission’s Chief Executive, Engr. Gbenga Komolafe, made the disclosure Monday, in a meeting with potential investors and other stakeholders at Transcorp Hotel, Abuja.
“It is a pleasure for me to welcome everyone to this crucial workshop organised to discuss and work
together on the proposed divestment of the participating interests held by the Shell Petroleum Development Company of Nigerian Limited (SPDC) in the SPDC JV Assets, through a sale by its shareholders of all the issued shares of SPDC to Renaissance Africa Energy Company Limited (Renaissance).”
He stressed that the “due diligence” meeting was to identify a successor who not only possesses the requisite financial resources but also demonstrates the technical expertise to responsibly manage these assets throughout their lifecycle.
“Our goal is clear at this due diligence meeting: to identify a successor who not only possesses the requisite financial resources but also demonstrates the
technical expertise to responsibly manage these assets throughout their lifecycle.
“Furthermore, 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.
“Permit me to emphasize that the NUPRC is committed to free entry, free exit business principle aimed at encouraging investors in the sector,” the CCE noted.
The Regulatory Chief stated that the Commission had developed a
Divestment Framework consisting of seven cardinal pillars to guide the assessment of applications for
Ministerial consent to the SPDC Divestment and other similar divestments.
He listed the seven requirements the successor of the assets must possess, proven and verifiable, to include:
-Technical Capacity: The successor entity must demonstrate proven and verifiable capacity to operate the asset vigorously and in a business-like
manner.
-Financial: The Commission shall assess the prospective successor entity’s balance sheet and financial viability and verify readiness to undertake a defined work programme and fulfil
required obligations on the assets.
-Legal: The acquiring entity must in line with the interest of the nation be ‘fit and proper’ persons in the eyes of the law. Clear evidence of the resolutions of legacy debts and legal encumbrances must be established and appropriate mechanisms to manage residuals agreed upon.
-Decommissioning & Abandonment (D&A). Applicable D&A 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.
-Host Community Trust / Environmental
Remediation Fund: The Commission shall assess the status of Host Community Trust Fund obligations and ensure the robustness of the successor entity’s adherence to decarbonisation
plans and sound Environmental Social &
Governance (ESG) principles.
-Industrial Relations and Labour Issues: 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 socioeconomic disruptions arising from failure to resolve labour issues that might result because of post-divestment.
-Data Repatriation: 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.
He appealed for cooperation with the investment process as he urged SPDC and Renaissance to engage proactively,
adhere to regulatory requirements, and work collaboratively with the NUPRC to ensure the successful conclusion of the Shell Divestment.
He thanked President Bola Ahmed Tinubu for his support and commitment to ensuring the attraction of investment and development of the Nigeria’s oil and
gas sector.
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.