Exit of oil companies worries Senators

The Senate, during its plenary yesterday, urged its Committees on Petroleum Downstream and Gas to conduct a holistic investigation into the implementation of the Petroleum Industry Act (PIA).

This decision followed the adoption of a motion titled “Urgent Need for an Inquiry into the Implementation of the Petroleum Industry Act (PIA) 2021 with Regards to the Potential Exit of International Oil Companies (IOCs) from Nigeria: The Case of ExxonMobil in Akwa Ibom,” sponsored by Senator Etim Aniekan.

Presenting the motion, Aniekan mentioned that the discovery of oil and gas in commercial quantity in Nigeria led to the arrival of International Oil Companies (IOCs) such as Shell PB, Mobil Producing Nigeria Unlimited (later merged into ExxonMobil), Nigerian Agip Oil Company (NAOC), and others.

He noted that the IOCs came to Nigeria for the purpose of further exploration, development, and production in the oil and gas sector. Aniekan stated that the IOCs entered into Joint Venture (JV) contracts with the Federal Government through NNPC Ltd.

Aniekan pointed out that the specific case in focus was the JV where NNPC had a 60 percent stake, while ExxonMobil held 40 percent in the JV between NNPC and ExxonMobil. He explained that responsibilities for capital expenditure injection into the JV and the proceeds were shared in corresponding proportions.

He further mentioned that ExxonMobil had offered to sell its entire onshore and shallow water facilities and business in Akwa Ibom, which included established fields and high-quality operations with a highly skilled local operational team.

The company also had a track record of safe operations, a high production rate, and an extensive footprint in Akwa Ibom. ExxonMobil’s intention was to exit its onshore and shallow water operations in the state and focus on deepwater production.

Aniekan raised concerns about the fact that NNPC had the Right of First Refusal (RFR) and had notified ExxonMobil of its intention to exercise that Right of Pre-emption regarding ExxonMobil’s planned sale of its entire assets in Nigeria’s onshore and shallow waters. However, ExxonMobil proceeded to close a deal with Seplat Energy Plc for that purpose.

Aniekan also noted that the Petroleum Industry Act (PIA) 2021 was enacted to provide legal governance, regulatory and fiscal framework for the Nigerian Petroleum Industry, and to address the multifarious challenges in the sector, which remains a crucial part of the country’s economy.

He pointed out that the PIA had not provided clear implementation plans for situations such as the emerging trend of IOCs exiting. Additionally, it had not holistically resolved issues concerning the protection of the federal government’s interests, producing states, host communities, or provided future assurances in handling situations like the current issue.

The lawmaker expressed concerns about the potential adverse effects of ExxonMobil’s exit from Akwa Ibom, including the loss of jobs, departure of professionals and service companies, revenue loss, and the abandonment of certain yet-to-be-satisfied obligations. He also worried that the new company taking over ExxonMobil’s assets and liabilities may not have sufficient capacity to successfully continue ExxonMobil’s work.

READ ALSO: Avalanche of miracles at Day 1 of largest healing

Aniekan emphasized the need to involve all stakeholders in the processes regarding ExxonMobil’s exit in Akwa Ibom, stating that it cannot be left solely in the hands of NNPC and other regulators. He urged for a comprehensive analysis and inventory of ExxonMobil’s activities in oil-producing states and host communities to ensure that the new entity taking over ExxonMobil’s responsibilities will act in the interest of the state and its people.

He further expressed concern about the lack of a workable coordination or clearing house for PIA implementation, which could ensure that NNPC, regulators, and oil-producing companies coordinate to bring about vital changes in the petroleum sector.

For more news update follow us on www.dailytimesng.com