Nigerian banks are exploring funding options to help the 2020 marginal oil field bid round licensees realise their field development targets, the Nigerian Upstream Regulatory Commission (NUPRC) has said.
Disclosing this on Tuesday in Abuja, the Chief Executive Officer of the upstream industry regulator, Gbenga Komolafe, said the production based lending arrangement was in recognition of the funding challenges some of the awardees were facing in sourcing needed capital to commence full field development towards first oil.
Komolafe said arrangement planned to commence soon would be between the NUPRC, Petroleum Production Licence (PPL) awardees, Exploration and Production (E&P) service providers and a consortium of Nigerian banks.
“It is to provide platforms for strategic partnership/alliance between the awardees and the service providers for Well Re-entry and drilling services,” Komolafe said.
“The arrangement is to be offered on service fee recoverable by the service providers from production to be attached,” he added.
He said the Commission has already concluded plans to organise an E&P International Financing Road show in Abuja in the coming weeks for financiers, investment bankers, private equities, and multi-lateral institutional investors to showcase the high value quick win opportunities available to investors in the recent PPL awards, the on-going National Gas Flare Commercialization Programme, as well as the on-going Mini-bid awards.
To ease the challenges thrown up by the initial corporate governance issues experienced prior to the inauguration of the Petroleum Industry Act (2021), he said the Commission has developed a Corporate Governance Framework for upstream petroleum operations.
The framework, he said, was currently at an advanced stage of internal review and stakeholder engagements required for its finalisation.
This, the Commission Chief Executive said, was aimed at enhancing sustainability, environmental and corporate governance requirements as well as facilitate capital attraction by investors for the optimal and efficient development of the PPLs and other assets.
To facilitate dynamic data gathering and accelerate the achievement of ‘first oil’, he said the Commission undertook the revision of the subsisting Extended Well Test (EWT) Guideline to enhance early cash flow and speed up the journey to first oil.
The strategy, he pointed out, has already yielded positive results with 16 companies submitting Field Development Plans (FDP), while two have already commenced unitization processes, with six re-entries and two gone through the EWT.
On the protracted disputes among some of the awardees triggered by shareholder disagreements and/or misunderstanding, the CCE said the Commission was collaborating with the parties to facilitate mediation towards early closure of the disputes.
This intervention, Komolafe said, was to ensure a diligent progression towards achieving the expected regulatory milestones, including value creation and achieving first oil.
Since the award of 47 PPLs to indigenous Nigerian entities in June 2022, he said the Commission has made concerted efforts within the confines of the law, to provide statutory guidance and support towards the progression of the assets towards field development.
Some of the steps taken by the Commission include the convocation of Regulatory Induction Programme for PPL awardees to enable them have the requisite understanding of the statutory protocols from the award to first oil and a week-long tripartite engagement in December last year in Lagos for about 30 entities, including awardees and initial asset owners.
During the event, the CCE said both the awardees and former asset owners resolved all impediments to the smooth take over by the awardees and operation to first oil.
“That event set the stage for engagements on issues required to fulfil initial work programme obligations.
“Areas that were presented and rigorously deliberated upon include Royalty and Tax administration, Data Exchange Protocol and Leasing requirements, Field Development Plan under the PIA (2021), Permitting Processes for Drilling and Re-entry Applications, Production Accounting, Facilities Deployment, and Host Communities’ Development.