Oil blocks award will now follow due process- NNPC, NUPRC

GMD, NNPC Limited, Mele Kyari

By Akinola Ajibade

The Nigerian National Petroleum Company Limited (NNPC) and Nigeria Upstream Petroleum Regulatory Commission ( NUPRC) would no longer award oil blocks and marginal fields to companies without discretion. 

The Chief Executive officers of the two major stakeholders ( regulator and operator respectively) spoke differently at the 2022 Strategic International Annual Conference organised by the National Associaton of Energy Correspondents (NAEC)held on Thursday, in Lagos recently.

While speaking at the event, the Chief Executive officer, NUPRC, Mr Gbenga Komolafe maintained that the signing of the Petroleum Industry Act (PIA) into law  by President Muhammed Buhari in August 2021 has put an end to the problems in the Marginal field exercise, before the establishment of NUPRC.

Represented by the  Head, National Oil and Gas Excellence Centre (NOGEC), Abel NSA, Komolafe said that the marginal fields award was initiated to increase the participation of indigenous companies in the upstream sector and build local content capacity.

Komolafe

According to him, the development aimed at creating employment opportunities and encouraging increased capital inflow to the sector and create employment opportunities.

He said 17 out of the 30 fields awarded are currently producing in the country.

Giving a beakdown of the allocation of the fields to indigenous operators, Komolafe said that two two fields awarded in 1999, 24 in 2003/2004, one each in 2006 and 2007, and two in 2010.

He said 57 fields were put up for bidding in 2020, 10 years after. 

” It will be recalled that one of the major tasks inherited by the NUPRC, upon its inauguration last year, was the need to conclude the 2020 Marginal Field Bid Round exercise.

“ We consequently pursued the matter frontally and are delighted to inform you that the exercise, which commenced in June 2020, has been concluded with the issuance of Petroleum Prospecting License (PPL)to the deserving awardees.

“The issuance of the PPL has ushered in a new dawn for our indigenous operators to hit the ground running in developing their awarded assets in line with industry best practices and to take full advantage of the increasing crude price in the international market.” 

He, however, noted that the passage of the Petroleum Industry Act (PIA) had brought an end to the era of marginal field awards.

Komolafe said Section 94(9) of the Act states that “No new marginal field shall be declared under this Act.”

“Accordingly, the minister shall now award PPL on undeveloped fields following an open, fair, transparent, competitive, and non-discriminatory bidding process in line with Sections 73 and 74 of the Act,” he said.

On the implementation of the PIA, he said the commission had issued six priority regulations.  These regulations are: Nigeria Upstream Host Communities Development

Regulations, Nigeria Upstream Fees and Rents Regulations, Nigeria Royalty Regulations, Conversion and Renewal Regulations.

Komolafe said others are Domestic Gas Delivery Obligations Regulations and Licensing Round Regulations.

He said the commission was also in the process of issuing additional seven regulations in phase two of the exercise in consultation with stakeholders in line with Section 216 of the PIA.

With all these achievements, Crude theft, he said, is still with us and it has become one of the major issues we are addressing as a commission and a government.

“We are planning seven additional regulations in line with provisions in the PIA to guarantee a return on every dollar invested in Nigeria over any other jurisdictions.”

In the PIA, Komolafe continued, “host community development Trust Fund has replaced Memorandum of Understanding (MoU) and GMoUs between oil companies and the hist communities.

Also in the act, there are incentives aimed at growing reserves towards realisation of 40bn barrels reserves, there are plans to reward production Milestones, as shown in Sections 232 and 233 of the act.”

He stated that there is a Road map for tackling the security challenges in the industry, we are collaborating with the security agencies, and we are installing gadgets for real-time loss detection. All these are done according to the provisions of the PIA.

The CEO of NNPC Limited, Mele Kyari who gave the keynote address, appraised NNPC’s PSCs renewal deals with Shell, Chevron, ExxonMobil.

“In the last three weeks, we have settled issues with our partners. We have met the terms and conditions in the PIA,” he said.

Kyari continued; “Our production is very low, due mostly to securitychallenges in the Niger Delta, and we are working collaboratively with stakeholders in addressing this.

“If we resolve the security issues, we will get back to 2.1 million barrels per day,” he said.

In a related development, a former President of Nigeria Gas Association (NGA), Mrs Audrey Joe- Ezigbo  urged  Nigeria take advantage of the ongoing Russia- Ukraine crisis in order to attract investors to develop its abundant gas resources.

According to her, Africa and indeed Nigeria have a high-energy poverty that can be transformed to opportunities by investors.

Joe-Ezigbo said: “We know Nigeria has very vast gas reserves and it is these reserves that we can channel for electricity generation through gas-powered energy plants.

“Gas also has the potential to be a very key driver of industrialisation or rapid economic advancement, as we’ve seen in several European countries.

“They’ve used gas to power their economies as feedstock and fuel for their industries.

“And really, we want a situation where Nigeria becomes one of those countries that is listed when we’re talking about nations that have leveraged their resources to build their economies.”