The Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has established a divestment framework to oversee the evaluation of applications for ministerial consent regarding the Shell Petroleum Development Company of Nigeria Ltd. (SPDC) divestment process.
This framework, composed of seven key pillars, will also be applied to similar divestment activities in Nigeria. NUPRC’s Chief Executive, Mr. Gbenga Komolafe, announced this during the NUPRC-Shell Petroleum Development Company of Nigeria Ltd. divestment workshop held on Monday in Abuja.
The workshop focused on due diligence for the proposed transfer of participating interests in the SPDC JV Assets. This includes the sale of all issued shares of SPDC to Renaissance Africa Energy Company Ltd.
At the commencement of the exercise, Gbenga Komolafe, the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, stated that the assets collectively contain an estimated 6.73 billion barrels of oil and condensate, along with 56.27 trillion cubic feet of associated and non-associated gas.
Komolafe outlined the seven cardinal pillars of the framework, which include technical capacity, financial capability, legal considerations, decommissioning and abandonment (D&A), host community trust/environmental remediation fund, industrial relations and labour issues, and data repatriation.
He explained that under technical capacity, the successor entity must demonstrate a verifiable ability to vigorously operate the asset, while the NUPRC will evaluate the financial viability of the prospective successor to carry out a defined program and meet the required obligations for the assets.
Regarding the legal framework, he noted that the acquiring entity must be considered a ‘fit and proper’ person legally. Additionally, he mentioned that there must be clear proof of the resolution of legacy debts and legal encumbrances.
Earlier this year, Shell announced the sale of its onshore operations to Rennaissance Energy- a consortium of about five companies for about $1.3 billion– a figure which will eventually reach $2.4 billion with additional payments.