Is it bulletproof? No – because, in my opinion, the need has not yet been reached,” he said. “When assets need to be decommissioned there would be more focus on analysis and legislation and shortfalls could be addressed through regulations.” tested. Some onlookers have warned that Sonangol will not give up its powers without a fight and expansion into a new area may prove to be a point of conflict.
Major projects in West Africa tend to be dominated by foreign majors, which are likely to sell assets down once a certain level of maturity is reached, as can be seen by Shell’s onshore sales in Nigeria.
Blythe said: “This may create challenges: the IOCs have experience and resources about how to carry out these projects, which the Nigerian companies currently lack.”
In the North Sea sales are becoming increasingly sophisticated in terms of how decommissioning liabilities are shared or transferred. This has not yet happened in West Africa and has been “largely overlooked” when it comes to M&A activity, “with the standard approach being that the incoming buyer assumes all liabilities. But this may begin to change,” Blythe said.
There are opportunities for knowledge and expertise to be transferred from mature areas, such as the North Sea or Gulf of Mexico, to West Africa.
One thing for service companies to bear in mind for such work will be local content requirements, Okusami said. “Decommissioning activities are services that are provided and when IOCs give out contracts those are covered by local content needs. There will be an impact on how services are granted.”