Sopuruchi Onwuka

Government’s policy makers, players and regulators in the petroleum industry has demanded the National Assembly to discontinue with the process of creating National Commission for the Decommissioning of Oil and Gas Installations (NC-DOGI).

Ad >>>

The Ministry of Petroleum Resources, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian National Petroleum Company (NNPC) Limited jointly opposed the bill to establish NC-DOGI, saying such a commission does not have practical role in industry operations.

Whereas the Chairman of House Committee on Petroleum Resources, (Upstream), Hon. Alhassan Ado Doguwa, said the bill was conceived to address local environmental issues and challenges within oil producing communities, the Minister of State for Petroleum Resources, Dr. Heineken Lokpobiri, said PIA has adequate provision for such roles.

Oracle Intelligence reports that decommissioning oilfield installations are done at the end of the field life when no commercially viable volumes of resources could be extracted from the production site. And each field life could last for decades, making the decommissioning exercise a are activity in the petroleum industry.

At a public hearing organized by the House of Representatives Committee on Petroleum Resources (Upstream), Dr. Heineken Lokpobiri, said the assumptions propelling the process to create NC-DOGI are ignorant and would not address any host community issue on ground.

He told the lawmakers that community issues are already being addressed by the Host Community Development Trust Fund (HCDT) which has generated nearly N400bn for community development projects.

Lokpobiri also stressed that creating a new agency to handle decommissioning and abandonment will duplicate the responsibility of the NUPRC as provided by Sections 232 and 233 of the Petroleum Industry Act (PIA) 2021.

Commission Chief Executive (CCE) of the NUPRC, Engr. Gbenga Komolafe, said creating a different commission for decommissioning and abandonment would not be in alignment with global best practices, where decommissioning and abandonment is domiciled with the upstream regulator.

He explained that decommissioning is not a stand-alone affair and would lead to having a separate regulator dealing with Field Development Plan (FDP) and a different agency handling decommissioning and abandonment.

“This will make the NUPRC not to have full line of sight on the FDP as Decommissioning and abonnement is an integral part of any FDP and will jeopardise the intended objective of the development plan.” he added.

Engr. Komolafe noted that between 2014 to 2021, Capital expenditure for oil and gas investment declined by about 75% due to the lack of a stable legal and regulatory framework until the emergence of the PIA.

The CCE aligned with the position of the Honourable Minister of State for Petroleum (Oil) and further stated that “Nigeria has now put in place the PIA, tinkering with it will send wrong signals to the international community that we have again started to create an unstable framework which will be a disincentive to the 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. “What will such a commission be doing when the NNPC, for instance, has no decommissioning and abandonment until 2045?” he asked.

He, therefore, wondered what NC-DOGI would be doing in the interim.

Dr. Lokpobiri further noted that Nigeria has been recording new Final Investment Decisions (FIDs) and witnessing renewed activities in upstream, midstream, and downstream operations, developments that were stagnant for over a decade before the Renewed Hope administration of President Bola Tinubu.

He therefore said the creation of the NC-DOGI risked scaring away investors.

He advised the Committee to step down the bill, citing that a predictable and stable legal framework attracts investors.