By Bassey Udo
The proposed establishment of a National Commission for the Decommissioning of Oil and Gas Installations by the National Assembly met a brick wall on Thursday as three key entities in the petroleum industry have voiced their strong opposition.
The Chairman, House Committee on Petroleum Resources, (Upstream), Alhassan Ado Doguwa, said the bill for the creation of a National Commission for the Decommissioning of Oil and Gas Installations (NC-DOGI), 2024 was conceived in order to address local environmental issues and challenges within oil producing communities.
But during at a public hearing by the House of Representatives Committee on Petroleum Resources (Upstream) on Thursday, the Federal Ministry of Petroleum Resources, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian National Petroleum Company Limited (NNPC) raised serious objections to the bill.
In his submission, the Minister of State for Petroleum Resources (Oil), Dr. Heineken Lokpobiri, said contrary to the assumptions by the lawmakers about the objectives of the bill, creating a Commission would not address any community issues.
The Minister said that objective was already being taken care of by the Host Community Development Trust Fund (HCDT) which has generated nearly N400bn for community development projects.
Also, Lokpobiri said that Nigeria has been recording new Final Investment Decisions (FIDs) and witnessing renewed activities in upstream, midstream, and downstream industries operations, and developments that were stagnant for over a decade before the present administration.
He therefore argued that the proposed creation of the NC-DOGI risked scaring away investors, rather than address any local environmental issues and challenges.
The minister said creating a new agency to handle decommissioning and abandonment will 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 Chief Executive (CCE) of the NUPRC, Engr. Gbenga Komolafe said creating a different Commission to handle decommissioning and abandonment was not in alignment with global best practices, where decommissioning and abandonment is domiciled with the upstream regulator.
Speaking as a subject matter expert, 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 abandonment was 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 percent 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 Minister of State for Petroleum (Oil) and further stated that “Nigeria has now put in place the PIA, tinkering with it would send wrong signals to the international community that we have again started to create an unstable framework which would 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 agenc
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.
