The Ministry of Petroleum Resources and its two agencies have jointly opposed the bill to establish the National Commission for the Decommissioning of Oil and Gas Installations (NC-DOGI), 2024.
The agencies are the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian National Petroleum Company Limited (NNPC Ltd.)
A statement in Abuja by Eniola Akinkuotu, Head, Corporate Communications and Media, NUPRC said that the position was delivered at a public hearing organised by the House of Representatives Committee on Petroleum Resources (Upstream).
In his submission, the Minister of State for Petroleum Resources, Dr Heineken Lokpobiri, said contrary to assumptions by the lawmakers, creating a Commission for decommissioning and abandonment would not address any community issues as these were already being taken care of.
Lokpobiri said the issues were taken care of by the Host Community Development Trust Fund (HCDT), which had generated nearly N400 billion for community development projects.
He said that Nigeria had 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 that the creation of the NC-DOGI risked scaring away investors.
The minister also said that creating a new agency to handle decommissioning and abandonment would duplicate the responsibility already vested in the NUPRC as provided by Sections 232 and 233 of the Petroleum Industry Act (PIA) 2021.
He advised the committee to step down the bill, citing that a predictable and stable legal framework attracts investors.
In his presentation, the Commission’s Chief Executive, NUPRC, Mr Gbenga Komolafe said creating a different Commission to handle decommissioning and abandonment did not align with global best practices, where they were domiciled with the upstream regulator.
The CCE said the issue of decommissioning was 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.
He said that between 2014 and 2021, Capital expenditure for oil and gas investment declined by about 75 per cent due to lack of a stable legal and regulatory framework until the emergence of the PIA.
The CCE aligned with the position of the Minister and stated that Nigeria has now put in place the PIA, tinkering with it will send wrong signals to the international community.
“ Creating such will show 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 said that decommissioning and abandonment were not a regular exercise but an activity that could take 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.
Earlier, the Chairman, House Committee on Petroleum Resources, (Upstream), Mr Alhassan Doguwa, said that the bill was conceived in order to address local environmental issues and challenges within oil producing communities.
