Business & Economy - News - Oil & Gas - August 5, 2022

NUPRC adopts new principles in acreage management, lease administration

MEDIATRACNET

Prospective licensees and leasees without a solid record of past performance in oil acreage management and administration may not stand a chance for an award, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has said.

The upstream petroleum industry regulatory authority said on Friday that in line with the objectives spelt out in the Petroleum Industry Act (PIA), it was adopting the new acreage allocation principles to optimize value from acreage management and administration.

The Chief Executive Office of the Commission, Gbenga Komolafe, said the new principle was a more strategic approach the Commission was adopting in the administration of oil licenses and leases to attain the national objectives spelt out in the PIA.

The national objectives in the petroleum industry are to grow the country’s oil production capacity and reserves, from the 2.3 million barrels per day and 30 billion barrels national reserves oil production to about 3 million barrels per day and 35/40 billion barrels national reserve.

To position the Commission on a Performance-centred paradigm for acreage management, Komolafe said the new strategy was based on a holistic assessment of the prior performance of all licenses and leases awarded prior to the PIA.

He said the assessment would seek to identify the areas of regulatory under-performance in acreage management and administration leading to failure of licensees and lessees inability to carry out licence and lease performance obligations, including acquisition of data, drilling of wells and maturing of identified leads and prospects within the licence or lease span.

In a memo to senior management staff of the Commission, Komolafe listed the aspects of the new strategy to include review assignee performance and contributions to licences and lessees, review compliance performance in reporting milestones by licensees and lessees, and the administration of regulatory consequence mechanisms, review loss allocation by licensees and lessees under the PIA.

These include production, cost and revenue, and performance review of existing multi-client arrangements and streamlining on-going activities to the PIA.

The CEO said the assessment framework would require all existing licencees and lessees to undergo a performance assessment audit of operation of licences and leases based on a framework to be developed by Lease and focussed on oil prospecting licenses (OPLs), oil mining leases (OMLs), Marginal oilfields and multi-client arrangements.

He said the evaluation process would cover compliance with environmental requirements, coupled with work programme commitments, compliance with revenue payment obligations and reporting obligations, audit of operating systems and third-party provider activities and assessment of assignee roles and performance obligations

Under the new dispensation, the NUPRC CEO said there would be need for a team with representation from relevant departments to review performance schematic of existing licences and leases; identify oversight weakness, identify licencee and lessee centred failures in regulatory reporting requirements and other performance indices; improve oversight mechanism in line with the objective of the PIA and aspects of new strategy as well as develop fresh Standard Operating Procedures (SOP) for acreage management and lease administration in line with the PIA.

The team, which would be made up of a member each from Exploration and Acreage Management: Development & Production; Health, Safety, Environment and Community; Economic Regulation and Strategic Planning and the Legal Secretary Departments, woul be expected to submit a final report by August 30, 2022.

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