NEITI to Review $6.03 Billion IOC Divestments Over Environmental and Other Concerns

The Nigeria Extractive Industries Transparency Initiative (NEITI) has announced a review of 26 oil block divestments worth $6.03 billion by five International Oil Companies (IOCs). This decision comes amid concerns from host communities over environmental damage and other unresolved issues.

Why NEITI is Reviewing These Deals

NEITI’s Executive Director, Ogbonnaya Orji, made this announcement during the agency’s first-quarter media briefing in Abuja. He highlighted how these transactions, including Shell’s $2.4 billion sale to Renaissance, ExxonMobil’s $1.28 billion deal with Seplat, and TotalEnergies’ $860 million transfer to Chappal, are reshaping Nigeria’s oil and gas industry. Given the scale of these deals, NEITI wants to ensure they follow due process and meet transparency standards.

To achieve this, NEITI will collaborate with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian National Petroleum Company Limited (NNPC Ltd.). The goal is to ensure full disclosure of financial, social, and environmental impacts related to these divestments.

Ensuring Transparency and Public Awareness

Mr. Orji stressed the need for transparency in these transactions to protect national interests, host communities, and revenue flows. He stated that NEITI would expand its industry reports to include a dedicated section on divestments. Additionally, NEITI plans to work with NNPC Ltd. and other agencies to disclose forward sales data, which involves pre-sales of crude oil and gas that impact government revenues.

The agency also aims to raise public awareness about asset transfers and ensure that the process remains open and accountable. This includes monitoring how divestments affect government revenue and fiscal stability.

Addressing Environmental Concerns

A major concern for NEITI is the environmental damage that oil-producing communities have endured for decades. Issues like oil spills, gas flaring, and water contamination have severely affected agriculture and fisheries, which are the main sources of livelihood for many residents. Mr. Orji emphasized that some divestments might not have properly addressed these environmental issues.

To tackle this, NEITI will work closely with NUPRC and the Ministry of Environment to enforce accountability. The agency wants to ensure that clean-up costs and environmental remediation efforts are properly handled.

Reviewing Forward Sales of Nigeria’s Crude Oil

In addition to the divestment review, NEITI will also examine Nigeria’s forward sales of crude oil, which involve selling oil in advance to secure loans. This review is necessary due to ongoing complaints from local refineries about inadequate crude oil supply.

Since NEITI started auditing the oil and gas sector 23 years ago, Nigeria has earned $831 billion from the industry. The agency has also recovered $4.85 billion from financial discrepancies uncovered in its 2021 oil and gas report.

Pushing for Stronger Industry Standards

As NEITI begins its 2024 Oil, Gas, and Solid Minerals Reports, it will expand its reporting framework to cover forward sales and pre-export financing transactions. While Nigeria has made progress in improving transparency in the extractive sector, there are still institutional and funding challenges that need to be addressed.

This review highlights NEITI’s commitment to holding oil companies accountable for their financial and environmental responsibilities. It also comes at a time when the world is shifting towards sustainable energy, making it even more crucial to ensure that Nigeria’s oil sector operates with transparency and social responsibility.