Reps decry non-compliance with PIA on oil sector decommissioning

The House of Representatives Ad-hoc Committee on Decommissioning and Abandonment has accused Nigeria’s key petroleum regulators of failing to comply with provisions of the Petroleum Industry Act (PIA) and other statutory requirements governing the winding down of ageing oil and gas assets.

The committee said the alleged lapses by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) pose significant environmental and fiscal risks to host communities and to the country’s economy.

The concerns were raised after officials representing the two regulators made submissions at the committee’s investigative hearing at the National Assembly on Monday.

The House had inaugurated the committee to scrutinise compliance with the PIA and relevant laws guiding decommissioning and abandonment (D&A). The probe was triggered by concerns over a funding gap estimated at about $20 billion and the mounting risk of liabilities from obsolete infrastructure across the sector.

The committee is examining operators’ D&A plans, whether companies are making mandatory financial provisions such as escrow accounts, and how effectively regulatory agencies are enforcing the law to prevent communities and the environment from bearing the cost of neglected assets.

Farouk Ahmed, Chief Executive of the NUPRC, was represented by Enorense Amadasu, Executive Commissioner, Development and Production, while Gbenga Komolafe, Chief Executive Officer, NMDPRA was represented by Mustafa Lamorde, Executive Director, Health, Safety, Environment and Communities. The representatives admitted that implementation of D&A regulations has been delayed despite legal requirements under the PIA.

They cited “legal technicalities” within the Ministry of Justice and issues relating to the Central Bank of Nigeria (CBN) and the management of required escrow accounts.

In his presentation, the NUPRC Boss insisted it had “strongly enforced” Sections 232 and 233 of the PIA. He stated that operators are now required to submit and secure approval for decommissioning and abandonment plans alongside their field development plans.

“Our response was clear that the NUPRC has strongly enforced the provisions of Section 232 and 233 of the petroleum acts by the PIA 2021 to the extent that every field development plan submitted to the NUPRC now… must include provision of the [D&A] plan,” he said.

He added that such plans ensure that “at the end [of the asset’s life cycle] the environment will be restored close to its original state”.

However, Bassey Ekpenyong, the committee chairman expressed dissatisfaction with the pace of implementation. He criticised the regulators over regulations approved since 2003 that have yet to be fully operationalised.

“The regulation is a regulation that was approved in 2003. And I want to believe that as soon as you did that, you submitted it to the Minister of Justice,” Ekpenyong said, questioning why the legal processes remained unresolved more than two decades after approval.