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Exit of IOCs From Nigeria: Senate To Investigate Implementation of PIA

The Senate has mandated its Committee on Petroleum Upstream, Downstream and Gas to conduct a holistic investigation on the implementation of the Petroleum Industry Act (PIA) with regards to potential exits of International Oil Companies (IOCs) from Nigeria.

This was sequel to a Motion brought before the Senate by the Senator representing the Akwa Ibom North-East Senatorial District, Senator Aniekan Bassey, during Thursday plenary.

Senator Bassey, in his Motion, titled “Urgent Need for Enquiry into Implementation of the Petroleum Industry Act (PIA) 2021 with Regards to Potential Exit of International Oil Companies (IOCS) from Nigeria: Case of ExxonMobil in Akwa Ibom State,” prayed the Senate to get involved salvage the situation.

The Senator expressed concern about “the potential adverse effects of the exit of ExxonMobil from Akwa Ibom State including high loss of jobs, exit of professionals and service companies from Akwa Ibom, loss of revenue as well as abandonment of certain yet to be satisfied obligations.”

He worried that “the new company taking over the assets and liabilities of ExxonMobil may not have sufficient capacity to successfully step into the ExxonMobil footprints and/ or muscle the pending obligations hitherto managed by ExxonMobil in the oil producing states and host communities. For instance, where clean-up is required or where capital intensive corporate responsibilities were commenced.

Senator Bassey prayed the Senate “to get involved in the processes regarding exit of ExxonMobil in Akwa Ibom State cannot be left in the hands of the NNPC and other regulators alone but that there is real need to involve all stakeholders for purpose of mapping, profiling, marking up, inventorizing and analyzing  what ExxonMobil was doing in the oil producing states and host communities with a bid to obtaining clear undertaking that whoever takes over ExxonMobil would, in the interest of the state and her people, also take over all or a reasonable volume of those responsibilities previously undertaken by ExxonMobil.”

According to him, “the PIA implementation has not yet produced any workable coordination or clearing house by which NNPCL, regulators and oil producing companies, work and coordinate vital petroleum sector changes with significance consequences, with the to-be-impacted host communities, cities and states.”

Through the Motion, the Senate acknowledged that “the discovery of oil and gas in commercial quantity in Nigeria saw 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), to name but some, in Nigeria for purpose of further exploration, development and production in the sector.”

The Senate also noted that “the IOCs went into Joint Venture (JV) contracts with the Federal Government through the NNPC (Now NNPC Ltd). Particularly, in the case in point, the NNPC holds 60% while ExxonMobil holds 40% shares in the JV between the NNPC and ExxonMobil. Both the responsibilities for injection of capital expenditure into the JV and the proceeds of same are shared in corresponding proportions.”

In his brief, Senator Bassey said he was “Aware that ExxonMobil offered to sell its entire onshore and shallow water facilities and business in Akwa Ibom State which is established fields and high-quality operations with a highly skilled local operational teams, track record of safe operations, high production rate as well as crucially extensive footprint in Akwa Ibom State, preparatory to its exit from its onshore and shallow water operations in the State and to focus on deepwater production. But curious that the NNPC has the Right of First Refusal (RFR) and has notified ExxonMobil of its intention to exercise that Right of Pre-emption on ExxonMobil’s planned sale of its entire asset in Nigeria’s onshore and shallow waters but ExxonMobil proceeded to seal a deal with Seplat Energy Plc for that purpose.”

He observed that the Petroleum Industry Act (PIA) 2021 was enacted to provide legal governance, regulatory and fiscal framework for the Nigerian Petroleum Industry as well as address the multifarious challenges in the sector which is still the main stay of the country’s economic life;

“Observes that the PIA has not made clear implementation plans for situations such as the now emerging trend of exit of the IOCs and has not holistically resolved issues bothering on protection of interest of the Federal Government, producing states, host communities or provided future assurances in the handling of situations such as the issue now in focus,” he explained.

Media Unit

Office of the Senator

Akwa Ibom North-East Senatorial District

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