By Bassey Udo
Nigeria’s oil and gas industry is witnessing steady progress since the enactment of the Petroleum Industry Act (PIA), the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has said.
In a presentation on the topic: “Defining the Outlook for Deep-Water Exploration and Production in Nigeria” during the 23rd Nigeria Oil and Gas (NOG) Energy Week Conference & Exhibition in Abuja on Wednesday, Komolafe said that apart from increased oil rigs count by operators, the country’s daily oil production has continued to grow progressively since 2021.
Before the enactment of the PIA, Komolafe said the country’s oil rig count declined from 18 in 2019 to 11 in 2020 and only eight in 2021.

Since the enactment of the PIA, which removed all regulatory uncertainties, fiscal and legal obstacles to the operations of the industry, the CCE said rig count rose to 10 in 2022, 24 in January 2023, reaching a peak of 31 rigs in August 2023 before climbing to the current level of 34 in June 2024.

In terms of oil output, he said during the corresponding period daily oil production capacity, including condensate, declined from 1.66 million barrels per day in January 2022 to about 1.15mbpd in August 2022 before climbing to a peak of 1.64mbpd, before steadying at the current average of 1.44mbpd, 1.45mbpd and 1.46mbpd in March, April and May 2024 respectively.
With over 39 high-impact achievements recorded since its inception in the areas of growing oil reserves, optimizing oil and gas production, growing oil and gas revenues, enhancing transparency and hydrocarbon metrics, creating the enabling environment for industry operations, promoting investment and value addition, as well as improving the overall regulatory environment, he said the Commission believes the industry is on the path of sustainable growth.
Beyond the gains of the PIA, he said the Executive Orders on Oil & Gas Reforms offered incentives for fresh investments to grow the industry.
Incentives under Presidential Executive Orders
Apart from Executive Order No. 40, which granted tax incentives, exemption, remission etc. in terms of fiscal incentives (Tax Credits) for non-associated gas (NAG) Greenfield Development projects, midstream capital & gas utilisation investment as well as deepwater oil and gas projects, he said Executive Order No 41 empowers the Nigerian Content Development Management Board (NCDMB) to pursue policies on local content development.
Besides, he said the Executive Order on new Consent timelines also helps promote competitiveness for the Nigerian National Petroleum Company Limited and NCDMB to attract foreign direct investments, while implementing the Nigerian Oil and Gas Industry Content Development Act, 2010.
Also, he said Executive Order 42 on the reduction of contracting costs and timelines Financial Approval Thresholds has raised contract approval thresholds to not less than $10m, and sets new Consent timelines for NNPCL and NCDMB to improve delivery on key industry projects.
Growing output, national reserves
To grow output and build national oil reserves, the CCE stressed the need to give priority attention to the country’s deepwater offshore oil exploration and production.
Deep offshore oil production, he pointed out, accounts for about 43 percent of the country’s total oil reserves; about 30 percent of the daily production capacity, and six percent of the total oil wells development, the offshore contributes entire oil wells.
“What this means is that Nigeria’s deep offshore is very proficient and prolific and needs to be given priority attention to boost the country’s production capacity,” he said.
The Commission, he assured, was determined to sustain this level of progress recorded so far by pursuing regulatory processes to create the enabling environment to ramp up oil production capacity towards set target.
“To unlock the abundant potentials of the country’s deep offshore, the Commission needs to embark on initiatives, namely implementation of the fiscal provisions in the PIA, such as zero hydrocarbon tax and sliding royalty by production, the 2024 Presidential Executive,” he said.
He said the NUPRC was collaborating with other agencies to implement these initiatives to grow the industry.
2024 Oil Licensing Round
Under the 2024 Oil Licensing Round, he said a total of 31 oil blocks have been put on offer for bid from prospective bidders, after five initially included in the basket of acreages on offer were later withdrawn as a result of pending litigations over unresolved issues bordering on their ownerships.
He said the award process, which commenced on April 29, would close by midnight of Friday this week.
Update on divestments
On divestments, he said although he supports the clamour to fast-track the process, from the regulatory point of view, the Commission believes divestments should be conducted in line with the rule of law and global industry best practices.
“Divestment is within the right of the investors, in the spirit of the principle of free entry and free exit. But, the Commission insists the security of the country’s national interest must be guaranteed through the divestment framework put in place to guide the process, to ensure both the seller and buyer benefits.
“The seller must ensure the buyer demonstrates financial and technical capabilities, without any legal encumbrances, while issues of decommissioning and abandonment are adequately resolved, so that the country does not end up with unintended burden of the negative outcomes.
“Again, the issue of host community trust fund and environmental remediation fund should be well resolved along with labour relations issues with workers and data repatriation.”
Providing updates on the status of the four ongoing divestments in the industry, Komolafe announced that the transactions between the Nigerian Agip Oil Company (NAOC) to Oando PLC as well as Equinor and Project Odinmim have been completed, pending their official signing of the agreement.
Although he said the relevant documentation in respect of the divestment by Shell Petroleum Development Company Limited (SPDC) to Renaissance, has been received by the NUPRC and currently undergoing the necessary due diligence, they were pending regulatory pronouncements.
However, he said parties in the Mobil Producing Nigeria Unlimited and Seplat Petroleum transaction have expressed commitment to proceed to apply to the NUPRC for Ministerial consent to frontload their documentation, which is still being awaited by the regulator for due diligence on the transaction.
“The Commission believes that as a regulator, based on positive feedbacks from the industry, the industry is making progress. Our focus is to create an enabling environment for the industry to thrive, including unlocking the potential in the deepwater offshore.
“Although the declaration of a state of emergency is necessary to increase our national oil production capacity, as the regulatory authority, the Commission believes it would rather be strategic, by embarking on regulatory processes that would reengineer multi-dimensional ways to act to ensure compliance with the provisions of the PIA and the rule of law in the industry,” he said.