LEGAL REGIMES OF DECOMMISSIONING IN THE OIL AND GAS SECTOR IN NIGERIA

LEGAL REGIMES OF DECOMMISSIONING IN THE OIL AND GAS SECTOR IN NIGERIA

BY ~ METI MONDAY UKPEH, ESQ.

ABSTRACT

In soothe, oil and gas production have been ongoing in Nigeria since the first major discovery of oil in commercial quantity in 1956. With over sixty years of exploitation, there is a tendency that several oil fields may be approaching the end of their viable lifespan. Moreover, with the increasing agitation against global warming and climate change, and the attendant shift towards energy transition and sustainable development, a wave of decommissioning in the oil and gas sector is to be expected globally. Since Nigeria is identifying with the energy transition agenda, the discourse on decommissioning is germane to the Nigerian oil and gas industry, especially because a move to cleaner energy sources will necessitate the decommissioning of several oil fields in the country. To ensure an effective decommissioning regime however, there must be established clear and enforceable rules and regulations for decommissioning in the oil and gas industry. Such rules and regulations must also address major issues and challenges attributable to decommissioning oil and gas projects generally. Against this backdrop, this study explores the various legal regimes applicable to the decommissioning of oil and gas projects in Nigeria, with the aim of identifying the adequacy or otherwise of such laws. Notwithstanding the existing laws, the study found few challenges that may still hinder effective decommissioning processes in Nigeria. Therefore, the study concluded by proffering suitable recommendations that can promote the objectives of decommissioning in the Nigerian oil and gas sector.

INTRODUCTION

Nigeria as a major oil and gas producer is host to several oil and gas installations situated both onshore and offshore. With approximately 175 (One Hundred and Seventy-Five) offshore installations and the growing prospect of more from the development of new oil and gas discoveries such as Bonga South West, these installations have a definitive life span and if not removed or recycled (decommissioned) at their end of life, the marine environment and host communities may be exposed to significant environmental and health hazards.

 

Overview of the Oil and Gas Industry in Nigeria:

 Oil was discovered in Nigeria in 1956, and production began in 1958. The industry has since grown to become a major contributor to the country's GDP.

Reserves: Nigeria has an estimated 37 billion barrels of oil reserves and 187 trillion cubic feet of natural gas reserves.

Production: Nigeria is the largest oil producer in Africa and the 12th largest in the world, producing an average of 1.8 million barrels per day (mb/d) of oil and 4.5 billion cubic feet per day (bcf/d) of natural gas

Export: Oil and gas are Nigeria's main export commodities, accounting for over 90% of the country's total exports.

Major Players: The industry is dominated by international oil companies (IOCs) such as Shell, ExxonMobil, Chevron, Total, and Eni, as well as the Nigerian National Petroleum Corporation (NNPC).

Challenges: The industry faces challenges such as:

- Infrastructure constraints

- Security concerns

- Environmental degradation

- Corruption

- Lack of transparency and accountability

- Limited local content and capacity

Working definition:

Decommissioning is the physical removal and disposal of obsolete installations at the end of their working life and this includes the plan of action as formulated by the operator and approved by the government. A robust decommissioning law or regulation will always provide for an operator’s plan of action which must be reviewed periodically. 

Section 318 of the Petroleum Industry Act defines decommissioning as “the approved process of cessation of operations of crude oil and natural gas wells, installations, plants and structures, including shutting down an installation’s operations and production, total or partial removal of installations and structures where applicable, chemicals, radioactive and all such other materials handling, removal and disposal of debris and removed items, environmental restoration of the area after removal of installations, plants and structures.” 

LEGAL FRAMEWORK FOR DECOMMISSIONING 

The legal framework for decommissioning oil and gas infrastructure in Nigeria is premised on both international and domestic law. 

International Legal Regime 

Nigeria is party to three (3) global treaties with provisions on decommissioning and disposal that must be considered in any discourse on the obligations of Nigeria to ensure the safety of the environment from any hazards from petroleum operations. The international legal regimes that regulate decommissioning globally and to which Nigeria has acceded to are: 

a. The Geneva Convention on the Continental Shelf, 1958; 

b. United Nations Convention on Law of the Sea, 1982; and 

c. The Convention on the Prevention of Marine Pollution by Dumping of Wastes and other Matters, 1972 and its Protocol of 1996. 

The Geneva Convention On The Continental Shelf, 1958

Nigeria ratified this Convention on 28th April, 1971. The Convention recognizes rights of member states to exploit the resources of their continental shelf, but also provides in Article 5(5) that: “Any installations which are abandoned or disused must be entirely removed.” This Article provides an explicit obligation for total removal and does not allow the contracting parties to do anything less than this requirement. The Convention adopted the complete removal regime because the presence of the installations would unduly obstruct navigation of the sea. Compliance with this provision did not prove effective prompting the United Nations to revisit the issue of redundant installations through the 1982 Convention on the Law of the Sea.

United Nations Convention On Law Of The Sea (Unclos), 1982 

Nigeria approved this Convention on 14th August, 1986. The requisite provision of the law on decommissioning is Article 60(3) which states that: 

"Any installation or structures which are abandoned or disused shall be removed to ensure safety of navigation, taking into account any generally accepted international standards established in this regard by competent international organization. Such removal shall also have due regard to fishing, the protection of marine environment and the rights and duties of other states. Appropriate publicity shall be given to the depth, position and dimension of any installations or structures not entirely removed."

Article 194 of the Convention further required member states to conduct decommissioning operations in a manner that would not damage the marine environment or cause injury to other states. 

The Convention On The Prevention Of Marine Pollution By Dumping Of Wastes And Other Matters, 1972 And Its Protocol Of 1996 

Article 111(1) (a) of the Convention prohibits the dumping of waste into the marine environment, and defines dumping as: 

a. Any deliberate disposal at sea of wastes, or other matters from vessels, aircraft, platforms or other man-made structures at sea; 

b. Any deliberate disposal at sea of vessels, aircraft, platforms or other man-made structures at sea. 

Under the Protocol to the Convention, the definition of ‘Dumping’ was expanded to explicitly include: “Any abandonment or toppling at site of platforms or other man-made structures at sea, for the purpose of deliberate disposal.” The Convention also permits a member state to grant permission for disposal provided that the waste has been assessed, the dumping site investigated and the proposed disposal technique evaluated. The allowance by the Convention on dumping was altered by the Protocol which made dumping a generally unacceptable practice. The protocol also adopts both the “precautionary principle” in Article 3(1) and “polluter pays principle” in Article 3(2). The protocol therefore contains appropriate preventive measures in circumstances “when there is reason to believe that wastes or other matters which are dumped into the aquatic surroundings can give rise to destruction.” 

The International Maritime Organization’s Offshore Removal Guidelines, 1989 

These Guidelines were made by International Maritime Organization for member states of UN Convention on Law of the Sea in line with Article 60(3) of the Convention on Law of the Sea. They are guidelines which contain minimum requirements for removing all structures installed in the Continental Shelf and within the Exclusive Economic Zone. The Guidelines provide that: 

a. Where member states propose to allow the whole or part decommissioning of platforms or structures, factors such as potential environmental, navigation impact, the costs involved, technical feasibility and risks on lives of personnel who would be involved in the removal should be taken into consideration. 

b. Member states must justify the reasons for allowing part removal of the installations. 

c. Complete removal of installations or structures that are located in defined areas which are important to navigation. Installations in such defined areas after 1st January, 1998, are prohibited except its plan and assembly are such that whole taking away will be possible. 

The Guidelines provide a general requirement of removal, which is subject to exception permitting non-removal or partial removal so long as it is consistent with certain guidelines and standards. For instance, there is an exemption from complete removal where such removal is not technically feasible or entails unacceptable risk to persons or the marine environment. However, there are no exceptions to total removal, where the oil platform no longer produces and the structure is located in navigation routes.

It is important to emphasize that the obligations in these Conventions are imposed on Nigeria and not on the petroleum operators. The binding effect of these provisions on Nigeria is restricted by virtue of section 12(1) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) which provides that: ''No treaty (convention) between the Federation of Nigeria and any other country shall have the force of law except to the extent to which any such treaty has been enacted into law by the National Assembly.''As a result of the constitutional provision, Nigeria is not under obligation to comply with its obligations under the conventions and can only be made to comply with the treaty obligations through: 

a. Domestication of treaties as constitutionally required; or 

b. Threat of sanctions or financial rewards by powerful state parties.

NIGERIA LEGAL REGIME ON DECOMMISSIONING

Highlights of Relevant Laws and Regulations in Oil and Gas Decommissioning in Nigeria:

Petroleum Act (1969): Regulates the exploration, production, and transportation of petroleum resources, including decommissioning.

Petroleum (Drilling and Production) Regulations (1969): Provides guidelines for drilling, production, and abandonment of wells.

Environmental Impact Assessment Act (1992): Requires environmental impact assessments for projects, including decommissioning.

National Environmental Standards and Regulations Enforcement Agency (NESREA) Act (2007): Establishes standards and regulations for environmental protection, including decommissioning.

Nigerian Oil Spill Detection and Response Agency (NOSDRA) Act (2006): Regulates oil spill response and compensation.

Briefanalysis:

Petroleum Act Of 1969 

In Nigeria, the Petroleum Act of 1969 does not have any specific provision on decommissioning of offshore installations. However, the Minister of Petroleum Resources has powers under section 9 of the Act to make regulations for the prevention of water and atmospheric pollution in Nigeria. Regulation 35 of the Petroleum (Drilling and Production) Regulations 1969 contains some broad provisions on abandonment. However, the recently enacted Petroleum Industry Act, 2021 requires all contractors of the now defunct NNPC, holders of oil prospecting licences (OPL) and oil mining leases (OML) to comply with the decommissioning obligations under the Petroleum Industry Act. Section 311(2)(d) of the Petroleum Industry Act provides that “contractors of NNPC, oil prospecting licences and oil mining leases shall be subject to the provisions of sections 232 and 233 of this Act.” The implication of this provision is that petroleum operators with licences and leases granted under the Petroleum Act are now mandated to comply with the decommissioning obligations created by sections 232 and 233 of the Petroleum Industry Act. 

The Oil And Gas Pipeline Regulations 1995

The Oil and Gas Pipeline Regulations 1995 were made to regulate the decommissioning of pipelines. Its provisions cover the discontinuance of use and abandonment of pipelines. In discontinuing the use of a pipeline, a licencee or lessee must give three (3) months’ notice with valid reasons and planned method to the regulator. The regulator may approve the discontinuance or approve and suggest a contrary method of removal to be used in the operations. For abandonment, the licencee or lessee may avoid removing the pipelines or completely remove them. Where the pipelines are to be removed, the regulator must approve the work programme prepared by the operator for the removal and the operator is statutorily obliged to carry out remediation after removal or “restore the surface of the land and the vicinity to a perfect condition.”

The Environmental Guidelines And Standards For Petroleum Industry In Nigeria (Egaspin) 2002 

In 2002, the Department of Petroleum Resources (DPR) issued the EGASPIN. EGASPIN was made based on the IMO Guidelines and Standards on decommissioning of 1985 and makes elaborate provisions for decommissioning of petroleum installations and facilities. Paragraph 13 of EGASPIN provides that “After 1st January, 2003, no installation or structure is to be placed in any continental shelf or Exclusive Economic Zone unless it is designed so that entire removal upon disuse would be feasible.” 

EGASPIN provides that communities where decommissioning is to take place are to be consulted where possible. Furthermore, if an Environmental Impact Assessment/Baseline/Sea–Bed Survey Report has not been prepared prior to project implementation, the licencee or lessee is required to provide an Environmental Evaluation (Post-Impact) Report and specific Decommissioning Plan. If the Environmental Impact Assessment/Baseline/Sea–Bed Survey Report had been prepared, the operator should only submit a Decommissioning Plan Report. 

It further provides that a Decommissioning Plan Report should contain as a minimum: 

a. Peculiarity of the project. 

b. The degree of abandonment (partial/wholly). 

c. Methods to be used for the removal of the structure. 

d. Disposal of removed structure, debris and associated wastes. 

e. Environmental protection/monitoring. 

f. Restoration and Remediation plans. 

With the recent enactment of the Petroleum Industry Act, it is expected that the Commission may issue another guidelines for decommissioning of oil and gas infrastructure in replacement of or in addition to EGSPIN. 

Petroleum Industry Act, 2021 

The Act in sections 232 and 233 make provisions for decommissioning and abandonment of onshore and offshore installations in Nigeria. These sections have improved the law relating to decommissioning of oil and gas installations in Nigeria. Section 232(1) provides that the decommissioning and abandonment of onshore and offshore petroleum wells, installations, structures, utilities, plants and pipelines for petroleum operations shall be conducted in accordance with: 

a. Good international petroleum industry practice; and 

b. Guidelines issued by the relevant authority provided that the guidelines shall meet the standards prescribed by the International Maritime Organisation on offshore petroleum installations and structures. 

By this provision, decommissioning activities must meet the requirements of the IMO’s Offshore Removal Guidelines and Standards which is an international standard utilized by countries to regulate offshore decommissioning of petroleum installations. The relevant authority may by written notice require a lessee, licencee or permit holder to commence the decommissioning of a well, installation, structure, utility and pipeline, where such decommissioning and abandonment is required in accordance with good international petroleum industry practices or the guidelines. Under section 232(2) of the Act, decommissioning is not to take place without the written approval of the relevant authority. 

A licencee or lessee may by written notice inform the relevant authority of its intention to decommission. The lessee or licencee shall, prior to any decommissioning, submit to the relevant authority a decommissioning programme setting out: 

a. Estimate of the cost of the proposed measures; 

b. Details of measures proposed to be taken; 

c. Clear descriptions of the methods to be employed to undertake the work programme, which shall be in line with good international petroleum industry practices and environmental development; 

d. Steps to be taken to ensure maintenance and safeguard, where any installation, structure or pipeline are to be partly removed; and 

e. Assessment of the environmental and social impact of the decommissioning measures.

The decommissioning programme submitted to the relevant authority “shall not be approved unless relevant environmental, technical and commercial regulations or standards are complied with.” Prior to the approval of a decommissioning programme, the relevant authority is required to ensure that: 

a. Considerations and recommendations are taken in the light of individual circumstances; 

b. The potential for reuse of a transportation pipeline together with other existing facility in connection with further hydrocarbon developments is considered before decommissioning;  All feasible decommissioning options have been considered and a comparative assessment made; 

d. Any removal or partial removal of an installation, structure or transportation pipeline is to be performed in a manner that guarantees sustainable environmental development; and 

e. Any recommendation to leave an installation, structure or gathering line in place is made with regard to its likely deterioration and to the present, possible and future effects on the environment and in the case of offshore installations and structures, consistent with the applicable good international petroleum industry practices.

The Act requires that onshore installations and structures to be completely removed and the environment restored to its original condition, except for buried transportation pipelines and gathering lines.

Decommissioning Fund 

Section 233 of the PIA introduces an innovative provision which requires each licencee and lessee to set up and maintain a decommissioning and abandonment fund, which shall be held by a financial institution that is not an affiliate of the lessee or licencee. The fund is to be maintained in the form of an escrow account accessible by the relevant authority under the provisions of an escrow agreement. The licencee or lessee shall inform the relevant authority of the establishment of its decommissioning fund not more than three (3) months from the date of commencement of production and furnish the relevant authority on an annual basis with statements of accounts with respect to its decommissioning fund. The fund is to be exclusively used to pay for decommissioning and abandonment costs where a lessee or licencee fails to comply with the decommissioning programme after notification by the appropriate authority. 

The lessee or licencee is required to establish in its decommissioning plan the yearly amount to be contributed into the decommissioning fund. This yearly contribution is to be reviewed every ten (10) years. Such contributions are tax deductible for the purpose of determining the tax liability of the licencee or lessee. 

Contractual Perspective

From a contractual point, oil and gas exploration and production contracts also include decommissioning obligations. For instance, the 2005 Model Production Sharing Contract entered into between contractors and NNPC provides that the Contractor is responsible for decommissioning and, is required to provide decommissioning security to ensure there are sufficient funds available to cover the costs of decommissioning. Section 232(4) of the Petroleum Industry Act provides that “In production sharing contracts or any other contractual arrangements pursuant to section 85 of this Act, responsibilities and liabilities relating to decommissioning and abandonment as specified in this section and section 233 of this Act shall apply to the licensee or lessee as contractor.” From this provision, it is therefore clear that all contractual arrangements in the Nigerian petroleum industry must comply with the decommissioning obligations created in sections 232 and 233 of the Petroleum Industry Act. 

The decommissioning obligations under the PIA also applies to the Nigerian National Petroleum Corporation Limited (NNPC Limited). The PIA created the NNPC Limited which has now been incorporated as a limited liability company under the provisions of the Companies and Allied Matters Act. Under section 53(7) of the PIA, NNPC Limited is to conduct its activities on a commercial basis without recourse to government funds. To ensure that there is no preferential treatment of NNPC Limited in relation to other companies operating in the industry, section 53(8) of the PIA provides that “Where NNPC Limited has a participating interest or 100% interest in a lease or licence, NNPC Limited shall pay its share of all fees, rents, royalties, profits oil shares, taxes and other required payments to the Government.” Section 64(a) of the PIA strengthens the commercialization of the NNPC Limited as it provides that “The objectives of NNPC Limited shall include the following - carry out petroleum operations on a commercial basis, comparable to private companies in Nigeria carrying out similar activities including exemption to Public Procurement Act, Fiscal Responsibility Act and Treasury Single Account.” By virtue of section 65(1) of the PIA, NNPC Limited and other parties to joint operating agreements in respect of upstream petroleum operations, may on a voluntary basis restructure their joint operating agreement as an incorporated joint venture company. 

The implication of these provisions is that NNPC Limited would be bound to set up a Decommissioning Fund and contribute to it if it has 100% interest in a lease or licence. Where it has a participating interest in a lease or licence, whether by way of incorporated joint venture or otherwise, NNPC Limited together with its partner is bound to set up a Decommissioning Fund and contribute its own share to the Fund.

Importance of decommissioning in Nigeria's oil and gas industry:

Environmental protection: Prevents oil spills, leaks, and other environmental hazards, protecting Nigeria's sensitive ecosystems and biodiversity.

Safety: Removes potential safety risks to humans and wildlife, ensuring a safe environment for communities and workers.

Compliance: Meets regulatory requirements and industry standards, avoiding legal and financial liabilities.

Cost savings: Reduces maintenance and operational costs, allowing for resource reallocation.

Reputation: Demonstrates responsible operatorship and commitment to sustainability, enhancing industry reputation and public trust.

Reuse and recycling: Allows for the reuse and recycling of materials, promoting sustainability and reducing waste.

Job creation: Creates new opportunities for workers in the decommissioning and restoration process.

Community development: Supports community development through restoration and rehabilitation of affected areas.

DECOMMISSIONING ACTIVITIES

Well abandonment

Facility dismantling

Pipeline decommissioning

Site restoration

Waste management and disposal

Environmental monitoring and remediation

Removal of hazardous materials

Disposal of decommissioned assets

Critical Components Of Oil And Gas Decommissioning In Nigeria:

(Well abandonment and platform removal)

Well Abandonment:

Plug and abandon wells to prevent oil spills and leakage

Remove wellheads and Christmas trees

Cement and plug wells to prevent fluid migration

Cut and remove well casings

Fill wellbores with cement or drilling mud

Verify well abandonment through surveys and monitoring

Platform Removal:

Disconnect and remove pipelines and umbilicals

Dismantle and remove topsides and jackets

Remove foundations and anchors

Transport materials to shore for recycling or disposal

Clean and remediate the seafloor

Verify platform removal through surveys and monitoring

Regulations and Guidelines:

Nigerian National Petroleum Corporation (NNPC) Regulations

Department of Petroleum Resources (DPR) Guidelines

Nigerian Maritime Administration and Safety Agency (NIMASA) Regulations

International Association of Oil and Gas Producers (IOGP) Guidelines

American Petroleum Institute (API) Standards

Best Practices:

Conduct thorough assessments and surveys

Develop detailed removal plans and schedules

Use specialized equipment and technologies

Ensure safe and environmentally responsible operations

Monitor and inspect removal activities

Document and report removal progress and completion

Well abandonment and platform removal are complex operations requiring careful planning, execution, and regulatory compliance to ensure safe and environmentally responsible decommissioning in Nigeria's oil and gas industry.

Crucial Steps In Oil And Gas Decommissioning In Nigeria:

Environmental impact assessment and monitoring are crucial steps in ensuring that decommissioning activities minimize harm to the environment. The process involves:

Environmental Impact Assessment (EIA):

Identify potential environmental impacts

Assess risks and hazards

Develop mitigation measures

Evaluate residual impacts

Develop an Environmental Management Plan (EMP)

Monitoring:

Water quality monitoring

Air quality monitoring

Soil and sediment monitoring

Biodiversity and ecosystem monitoring

Noise and vibration monitoring

Waste management and disposal monitoring

Compliance monitoring with regulations and EMP

Objectives:

Identify and mitigate potential environmental impacts

Ensure compliance with regulations and standards

Protect the environment and public health

Support sustainable development

Inform decision-making and improvement of decommissioning activities

Decommissioning Permits In The Nigerian Oil And Gas Industry: these are issued by the Department of Petroleum Resources (DPR) and require operators to meet certain requirements, including:

Submission of a decommissioning plan

Environmental impact assessment (EIA)

Site-specific decommissioning design

Waste management and disposal plan

Removal and disposal of hazardous materials

Restoration of sites to original condition

Public consultation and stakeholder engagement

Compliance with regulatory requirements and standards

Financial guarantee or insurance coverage

Approval from relevant authorities (e.g., Nigerian National Petroleum Corporation (NNPC))

Monitoring and compliance ensure that decommissioning activities are executed responsibly and sustainably, minimizing environmental impact and ensuring public safety.Monitoring and inspection in oil and gas decommissioning in Nigeria are crucial to ensure compliance with regulations, safety, and environmental standards. The following are involved in the monitoring and inspection process:

Department of Petroleum Resources (DPR)

Nigerian National Petroleum Corporation (NNPC)

Environmental agencies (e.g., NESREA)

State and local government agencies

Independent inspectors and auditors

Operators and contractors

Effect Of Noncompliance

Fines and penalties (financial)

Revocation of operating license or permit

Suspension of decommissioning activities

Legal action (criminal or civil)

Environmental damage compensation

Reputation damage and loss of public trust

Legal action by affected communities or stakeholders

Increased scrutiny and monitoring by regulatory agencies

Requirement for additional remediation or restoration work

Potential criminal prosecution of responsible individuals

Dispute Resolution In Oil And Gas Decommissioning In Nigeria:

Common disputes

Decommissioning cost allocation

Asset valuation and sale

Environmental liability and remediation

Contractual obligations and breach

Payment disputes and delayed payment

Regulations

Nigerian Arbitration and Conciliation Act (ACA)

Nigerian Oil and Gas Industry Content Development Act (NOGICDA)

Department of Petroleum Resources (DPR) regulations

Dispute Resolution Mechanisms:

Negotiation and mediation

Conciliation and arbitration

Litigation (court proceedings)

Arbitration:

Institutional arbitration (e.g., Nigerian Institute of Arbitrators)

Ad hoc arbitration

International arbitration (e.g., ICC, LCIA)

Arbitration benefits:

Flexibility and autonomy

Expertise in oil and gas disputes

Confidentiality and privacy

Enforcement of awards (New York Convention)

Some Major Players Involved In Dispute Resolution In Oil And Gas Decommissioning In Nigeria:

Nigerian Institute of Arbitrators (NIArb)

International Chamber of Commerce (ICC) Nigeria

London Court of International Arbitration (LCIA) Nigeria

Nigerian National Petroleum Corporation (NNPC)

Department of Petroleum Resources (DPR)

Ministry of Petroleum Resources

Federal High Court of Nigeria

Court of Appeal, Nigeria

Supreme Court of Nigeria

Arbitration and ADR firms in Nigeria (e.g., Templars, Banwo & Ighodalo)

International arbitration centers (e.g., ICC, LCIA, SIAC)

Expert arbitrators and mediators in oil and gas decommissioning

Some notable arbitration cases in Nigerian oil and gas decommissioning include:

NNPC vs. Chevron (2019)

DPR vs. Total E&P (2020)

Shell vs. Nigerian Government (2018)

ExxonMobil vs. NNPC (2017)

Operators and contractors should consider arbitration as a preferred dispute resolution mechanism due to its flexibility, expertise, and enforceability. Early dispute resolution can prevent costly delays and reputational damage in decommissioning projects.

INTERNATIONAL BEST PRACTICES AND COMPARISONS

International Standards and Guidelines in Oil and Gas Decommissioning:

International Association of Oil and Gas Producers (IOGP) guidelines

International Maritime Organization (IMO) conventions and regulations

International Standardization Organization (ISO) standards (e.g., ISO 13547)

Society of Petroleum Engineers (SPE) guidelines

American Petroleum Institute (API) standards and recommended practices

European Union's Offshore Oil and Gas Decommissioning Guidelines

United Nations Environment Programme (UNEP) guidelines

International Finance Corporation (IFC) Environmental and Social Performance Standards

These international standards and guidelines cover aspects such as:

Environmental impact assessment and management

Decommissioning planning and execution

Safety and risk management

Waste management and disposal

Asset valuation and sale

Restoration and rehabilitation of sites

Stakeholder engagement and community involvement

Compliance with national and international regulations

Adopting international standards and guidelines in oil and gas decommissioning in Nigeria ensures:

Technical excellence

Environmental sustainability and social responsibility

Compliance with global standards and regulations

Enhanced reputation and credibility

Improved safety and risk management

Increased stakeholder trust and confidence

Better decision-making and project outcomes

Alignment with international benchmarks and expectations.

Comparative Perspectives of Some Oil Economies:

Nigeria's oil and gas decommissioning regulations and practices are evolving, but they still lag behind international best practices in countries like the UK, US, and Australia. Here's a comparison:

1. UK:

More comprehensive regulations (OSPAR, EU directives)

Stronger environmental focus

Mandatory decommissioning plans

Public consultation and transparency

2. US:

Robust regulatory framework (BSEE, EPA)

Emphasis on safety and environmental protection

Decommissioning plans required for offshore facilities

Public engagement and stakeholder involvement

3. Australia:

Stringent regulations (NOPSEMA, EPBC Act)

Focus on environmental sustainability

Decommissioning plans and approvals required

Public consultation and community engagement

Nigeria's regulations, while improving, still have gaps in:

Environmental impact assessment and management

Public consultation and stakeholder engagement

Decommissioning planning and execution

Safety and risk management

Asset valuation and sale

Restoration and rehabilitation of sites

CONCLUSION AND RECOMMENDATIONS

Conclusion:

It is noteworthy to submit that, adopting international best practices from the UK, US, and Australia can enhance Nigeria's oil and gas decommissioning regulations and practices, ensuring better environmental outcomes, improved safety and risk management, increased transparency and public engagement, enhanced reputation and credibility, alignment with global standards and expectations; thus, Summarily:

Regulatory framework: Nigeria's regulatory framework is evolving, but still lacks clarity and strength.

Environmental impact: Decommissioning activities pose environmental risks, and Nigeria's regulations require improvement to mitigate these risks.

International best practices: Nigeria can learn from international best practices in decommissioning, such as early planning, stakeholder engagement, and safety prioritization.

Decommissioning planning: Decommissioning plans are often inadequate or non-existent, leading to delays and environmental damage.

Asset valuation and sale: Asset valuation and sale processes are often opaque and inefficient.

Restoration and rehabilitation: Restoration and rehabilitation of decommissioned sites are often neglected, leading to environmental legacy.

Stakeholder engagement: Stakeholder engagement is often inadequate, leading to community unrest and trust issues.

Safety and risk management: Safety and risk management practices are often inadequate, leading to accidents and environmental damage.

Technology and innovation: Nigeria's decommissioning industry can benefit from adopting new technologies and innovations.

Capacity building: Capacity building and training are essential for effective decommissioning in Nigeria.

Recommendation:

Strengthen regulatory framework: Develop a robust and clarificatory regulatory framework that aligns with international best practices.

Enhance environmental impact assessment: Conduct thorough environmental impact assessments to identify and mitigate potential risks.

Adopt international best practices: Emulate international best practices in decommissioning planning, execution, and restoration.

Improve decommissioning planning: Develop comprehensive decommissioning plans that include robust environmental and safety assessments.

Enhance asset valuation and sale processes: Establish transparent and robust processes for asset valuation and sale.

Prioritize restoration and rehabilitation: Ensure restoration and rehabilitation of decommissioned sites to minimize environmental legacy.

Foster stakeholder engagement: Engage with local communities, regulators, and industry stakeholders to ensure transparency and trust.

Prioritize safety and risk management

Implement robust safety and risk management practices to prevent accidents and environmental damage.

Leverage technology and innovation: Adopt new technologies and innovations to improve decommissioning efficiency, safety, and environmental performance.

Build capacity and training: Provide training and capacity-building programs for regulators, operators, and contractors to enhance decommissioning skills and knowledge.

Establish decommissioning fund_: Set up a decommissioning fund to ensure financial provision for decommissioning liabilities.

By implementing these recommendations, Nigeria can improve its oil and gas decommissioning practices, reduce environmental impact, and enhance the overall sustainability of the industry

WORKS CITED

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Ernest E. Smith et al: International Petroleum Transactions, (Rocky Mountain Mineral Law Foundation, Denver Colorado 1993) 553

Israel Aye, Laura Alakija and Esther Wingate, “The Oil And Gas Law Review”. London: Law Business Research Ltd.(5th edn.). available at www.TheLawReviews.co.uk last accessed on 10|07|2024.