Senate Probes PIA Implementation, Possible IOCs’ Exit from Nigeria

Sunday Aborisade in Abuja 

The Senate on Thursday launched a full investigation into the implementation of the Petroleum Industry Act (PIA) with regards to the potential exits of some international oil companies from Nigeria. 

The red chamber took the decision following the senators’ extensive deliberation on a motion by Senator Etim Bassey Aniekan (Akwa-Ibom North East)

It was 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’.

The sponsor of the motion 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 a few in Nigeria for purpose of further exploration, development and production in the sector; 

He 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 ExvonMobil. 

He said that ExxonMobil offered to sell its entire onshore and shallow water facilities and business in Akwa Ibom State preparatory to its exit from its onshore and shallow water operations in the state and to focus on deepwater production.

He said the NNPCL has the Right of First Refusal (RFR) and has notified ExxonMobil of its intention to exercise that Right of Preemption 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.

He also observed that the PIA has not made clear implementaticn plans for situations such as the now emerging trend of exit of the IOCs and has not holistically resolved issues bordering 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.

The senator noted that similar sudden withdrawal of Shell from Warri in Delta State left a void in terms of employment opportunities, infrastructural development, economic support and has generated other profound negative implications for the local communities, and across the footprint of surrounding towns and cities.

He said the development resulted in a myriad of societal crises, security challenges and now reducing the once centre of activities into ghost towns and cities.

He 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 also noted  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. 

He said: “For instance, where clean-up is required or where capital intensive corporate responsibilities were commenced.

“The need 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. 

“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.”