Nigeria has introduced tougher financial rules for oil companies operating in its upstream sector, with regulators confirming that $4.42 billion worth of decommissioning and abandonment plans have been approved since April 2023.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) revealed that 94 plans tied to Field Development Projects have cleared regulatory review. Under the system, operators are required to set aside funds throughout the production life of their fields in escrow accounts, in line with the Petroleum Industry Act (PIA) of 2021.
NUPRC chief executive Gbenga Komolafe explained that the framework is designed to prevent future environmental and financial burdens on the government. “We have already secured commitments exceeding $400 million through escrow and letters of credit,” he noted, adding that a new escrow domiciliation arrangement with international oil companies is awaiting approval from the Ministry of Justice.
Komolafe’s remarks, delivered at a Nigerian Extractive Industries Transparency Initiative (NEITI) forum, pointed to global cautionary tales where poorly managed divestments left states with massive cleanup bills. He cited liabilities projected at £27 billion in the UK North Sea by 2032, more than $9 billion in the Gulf of Mexico, up to CAD 70 billion for Alberta’s dormant wells, and the fallout from Northern Oil & Gas Australia’s collapse in 2019.
Industry watchers say the Nigerian regulator is determined not to repeat those mistakes. Recent divestments by major players have already tested the stricter regime. These include Shell’s $2.8 billion sale of its onshore business to Renaissance Africa Energy (completed March 2025), Equinor’s exit through the sale of its Agbami stake to Chappal Energies (December 2024), ExxonMobil’s $1.28 billion deal with Seplat Energy (December 2024), and Eni’s disposal of its Nigerian Agip Oil Company subsidiary to Oando Plc (August 2024).
Meanwhile, TotalEnergies is reshaping its Nigerian portfolio. In May 2025, it agreed to transfer its 12.5% non-operated interest in the Bonga field (OML 118) to Shell for $510 million. That transaction is expected to close by the end of the year once regulators give the green light.
By embedding financial guarantees into every stage of oilfield development, the NUPRC says Nigeria is positioning itself to safeguard public finances and ensure environmental accountability as the sector undergoes sweeping changes.
