By Tochukwu Bliss, Abuja
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), yesterday, said it has begun the evaluation of the divestment processes of Shell’s 75-year-old onshore assets for $2.4 billion to Renaissance Consortium, the new investors.
The Commission said it has developed a divestment framework consisting of seven cardinal pillars to guide the assessment of applications for ministerial consent to the Shell Petroleum Development Company (SPDC) divestment and other similar ventures.
The assessment includes Shell’s labour relations and liabilities to workers, if any, and obligations to host communities and environment issues to avert possible socioe-conomic disruptions.
The Commission Chief Executive, Gbenga Komolafe, disclosed this at the NUPRC-SPDC divestment workshop, which consists of pillars to guide the assessment of applications for ministerial consent in Abuja.
He said: “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.
“Today’s workshop provides us with a platform to engage in constructive dialogue, share insights, and collaboratively assess the capabilities of Renaissance.
“As regulators, we will ensure that this evaluation is conducted with precision and impartiality, with a focus on transparency and accountability.”
The Commission will also assess the status of Host Community Trust Fund (HCDF) obligations and ensure the robustness of the successor entity’s adherence to decarbonisation plans and sound Environmental Social & Governance (ESG) principles.
Mr. Komolafe continued: “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.).
To this end, he revealed that the two leading consultants – S&P Global and Boston Consulting Group (BCG), have been enlisted to work with the Commission to ensure a smooth excercise.
Also speaking, the General Manager, SPDC Assets and Deputy Managing Director, Wessel de Haas, said the workshop will be used to provide the necessary clarifications to enable NUPRC to complete its due diligence process.
As regulators, we will ensure that this evaluation is conducted with precision and impartiality, with a focus on transparency and accountability.
Assets in consideration
According to Mr. Komolafe, the Shell-operated joint venture (JV) with NNPCL Limited, Total Upstream Nigeria Limited, and Nigeria Agip Oil Company assets hold a combined estimated volume of 6.73 billion barrels of oil and condensate, and 56.27 trillion cubic feet of associated and non-associated gas.
Recall that the SPDC, in January announced that it had reached an agreement to sell its onshore assets in the Niger Delta region to Renaissance, to enable it focus on its Deepwater and Integrated gas investments.
Renaissance Africa Energy Company Limited is a consortium of five companies comprising ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, a Swiss firm.
The assets were converted to oil mining leases (OMLs) in 1962, and subsequently renewed in 2014 and 2018.
The JV OMLs were originally awarded as Oil Exploration Licence -1(OEL-1) on January 1, 1949 covering the whole of Southern Nigeria and Cameroon.
The assets were converted to OMLs on April 1, 1962 and subsequently renewed in 2014 and 2018 for 20 years.
To date, the assets are estimated to have achieved a cumulative production of 5.35 billion barrels of crude oil; 165.57 million barrels of condensate; 9.51 trillion cubic feet of associated gas; and 3.75 trillion cubic feet of non-associated gas, thus contributing immensely to Nigeria’s crude and condensate production.
