Oil and Gas exploration: need to investigate abandonment, decommissioning obligations – Bassey.
By Ihegazie Hope Chidinma
Abandonment and Decommissioning costs are the costs associated with the physical removal and disposal of obsolete oil installations at the end of their operational life and the restoration of the environment to the state it was before exploitation.
Budgetary provisions are approved for oil companies in their yearly budgets as contained in the JV/PSC clauses for abandonment and decommissioning but such budgetary allocations are scarcely utilized by oil companies operating in Nigeria for its purpose.
Senator representing cross river south, Bassey Gershom Henry disclosed this on Wednesday in a motion that stressed the need to investigate the degree of enforcement of abandonment and decommissioning obligations in oil and gas exploration contracts.
Bassey noted that united Nations convention on the law of the seas Art. 60(3), Geneva convention article 5(5), the Oslo and Paris convention for the protection of marine environment, the 1967 Territorial water Act and 1969 petroleum Act all has provisions for mandatory abandonment and decommissioning for oil companies.
He said that provisions for decommissioning and restoration are recognized even if the decommissioning is expected to be performed much later, adding that most of the oil companies in Nigeria fail to restore exploited sites after the expiration of their lease as witnessed in the Niger delta.
He stated that “at the point of transfer of interest by one oil company to another, there is lack of clarity in many instances with regards to financial liability for abandonment and decommissioning thereby causing untold hardship to the host community”.
Bassey however mandated the committee on petroleum resources to conduct a comprehensive review of the relevant laws, product Sharing Contracts PSC, Joint Venture Contracts JVC and arrangements governing Abandonment, Decommissioning, Remediation and investigate the degree of compliance with these laws by oil companies operating in Nigeria.