Senator Bassey worried that the exit of IOCs would lead to loss of jobs, loss of revenue, and abandonment of certain yet-to-be-satisfied obligations.
The Senate has mandated its Committees on Petroleum (Upstream), Down Stream, and Gas to conduct a holistic investigation into the implementation of the Petroleum Industry Act (PIA) with regard to the potential exits of IOCs from Nigeria.
This directive is contained in a motion on the “Urgent need for an inquiry into Implementation of the Petroleum Industry Act (PIA) 2021 with regards to the potential exit of International Oil Companies (IOCS) from Nigeria: Case of ExxonMobil in Akwa Ibom State,” sponsored by Senator Aniekan Etim Bassey (PDP, Akwa-Ibom North-East).
In his lead debate, Bassey noted how the discovery of gas and oil in commercial quantities in Nigeria led to the entry of international oil companies (IOCs) in Nigeria with the intention of advancing the sector’s exploration, development, and production.
According to him, the IOCs went into Joint Venture (JV) contracts with the Federal Government through the NNPC (Now NNPC Ltd). In the case in point, the NNPC holds 60% while ExxonMobil holds 40% shares in the JV between the NNPC and ExxonMobil. The responsibilities for the injection of capital expenditure into the JV and the proceeds of the same are shared in corresponding proportions.
He said “ExxonMobil offered to sell its entire onshore and shallow water facilities and business in Akwa Ibom State which had established fields and high-quality operations with highly skilled local operational teams, track record of safe operations, high production rate as well as a crucially extensive footprint in Akwa Ibom State, preparatory to its exit from its onshore and shallow water operations in the State and to focus of deepwater production.
“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 purposes.”
Senator Bassey further noted that the Petroleum Industry Act (PIA) 2021 was passed in order to solve the numerous issues facing the industry, which is still the foundation of the nation’s economy, and to provide legal governance, regulatory, and fiscal framework for the Nigerian petroleum industry.
He bemoaned the lack of clear implementation plans for circumstances like the current trend of IOC exits, as well as the PIA’s failure to address issues that concern the protection of the interests of the host communities, producing states, and the federal government in a comprehensive manner or to offer assurances for the handling of similar situations in the future.
“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, resulting in a myriad of societal crises, security challenges and now reducing the once center of activities into ghost towns and cities;
“The potential adverse effects of the exit of ExxonMobil from Akwa Ibom State include 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.
“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,” he stated.
In his contribution, Senator Ekong Samson (PDP, Akwa-Ibom South) noted the importance of the motion and urged his colleagues to pass it with immediate effect.
“This has raised a number of concerns and anxiety. This motion is timely and we need to measure the impact of the host communities because Akwa-Ibom South and other parts of the country need to hold the PIA accountable. There is merit in this motion, and I support it,” he said.