• Fri. Sep 29th, 2023

We’re focussed on achieving our mandate, NUPRC boss assures operators, industry players


Feb 18, 2023

The upstream petroleum industry regulator says it will continue to focus its attention and resources on achieving its mandate to sustain the development of the country’s petroleum industry.

The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, gave the assurance on Thursday at the special quarterly oil and gas industry dinner organized by the Lagos Petroleum Club.

Mr Komolafe delivering his paper at the dinner

Komolafe who was the special guest at the event spoke of the topic: “Nigerian Upstream Petroleum Sector: Value Optimization, Energy Transition, and Regulatory Perspectives.”

He said in line with the provisions of Section 6 of the Petroleum Industry Act (PIA) 2021, which prescribes statutory functions of the Commission as the upstream petroleum technical and commercial regulator, the NUPRC has been working to meet set national targets.

“In alignment with these objectives, we have focused on achieving basic regulatory goals which include: increasing Nigeria’s oil and gas reserves and production, developing a transparent approach to hydrocarbon accounting, and attaining operational efficiency and effectiveness in the industry operations. 

“In addition, the Commission is committed to facilitating peace and harmony in the host communities to guarantee a conducive operating environment for investors, positively impact on operating cost and attraction of more investment opportunities,” he said.

Komolafe highlighted specific strategic actions the agency has taken since its establishment toward realizing hydrocarbon value optimization in the country. 

He said In keeping with industry laws and regulations, the Commission has issued a licensing round guideline and published a licensing round plan for seven open oil blocks (300-DO, 301-DO, 302-DO, 303-DO, 304-DO, 305-DO & 306-DO) and currently evaluating the Expression of Interest (EOI) received from prospective investors. 

The exercise, he said, was expected to be a big step for the country towards growing its oil and gas reserves, assuring that this would be done through aggressive exploration and development efforts. 

As part of the strategy for value optimization and increased production from the country’s national oil and gas reserves, he said the commission has focused on regulatory initiatives aimed at reviving declining wells through an enhanced oil recovery approach. 

Besides, he said The Commission was working with operators to identify candidate wells and appropriate interventions to achieve increased production, while focusing on shut-in wells that could easily be revived. 

Pursuant to this, the CCE said a committee was inaugurated on June 23, 2022, to conduct an industry-wide study on the reactivation of Shut-in strings, adding that a report submitted included recommendations for Quick Wins, Medium and Long-Term initiatives to enhance national oil and gas production volumes.

Findings in the report, he disclosed, revealed that over 900,000 barrels of oil per day could be realized from the Quick Win interventions, while the Medium and Long-Term initiatives could potentially add about 1.2 million barrels of oil per day, if properly and fully implemented. 

With the total number of strings that need to be revived already known, he said the Commission has commenced engagement with the relevant operators to operationalize the initiative.

In addition, h said the 2020 Marginal Field Bid Round has been completed, with 50 Petroleum Prospecting Licenses (PPLs) issued to deserving awardees. 

With the existing discoveries in the awarded oil fields, he said the expectation was that early Field Development Plan (FDP) would be pursued by the awardees, leading to incremental oil and gas production. 

Again, he said the Commission was facilitating timely approvals for expedited re-entry and early production, with estimated incremental production from the awarded fields put at approximately 58,000 barrels per day and 87 million standard cubic feet of gas per day. 

In the short/medium term, he said an estimated incremental volume of 461,000 bpd and 565 mmscf/d was expected from new wells and well re-entry, while long-term initiatives were expected to yield an estimated incremental volume of 162,000 bpd and 868 mmscf/d from various approved field development programmes (FDPs) at various stages of execution.

He bemoaned the menace of crude oil theft, describing it as one major area of value erosion in the industry that has negatively impacted the oil and gas sector for about two decades with attendant huge financial losses. 

Following the directive by President Muhammadu Buhari, he said the Commission, in collaboration with the various arms of the Security forces, the NNPC Limited and the Host Communities, have been able to suppress the ugly trend of hydrocarbon value decimation. 

These collaborative efforts, he said, have resulted in the progressive increment in production figures in recent times, with approximately 1.5 million barrels per day of oil and condensate volumes realised by last January.

The expectation, he noted, was that the numbers would continue to increase as further measures are introduced and sustained to remove all illegal connections that aided crude oil theft.

On efforts to achieve transparency in hydrocarbon accounting, Komolafe said the Commission recently held consultations with major stakeholders in respect of the third phase of Regulations on Upstream Petroleum Measurement laws. 

These regulations, he pointed out, were developed to ensure sustainable transparency in hydrocarbon accounting, adding that a forensic audit covering the period January 2020 to November 2022 was conducted on crude oil theft numbers with a view to ascertaining the accuracy of the stolen volumes of crude oil within the reference period. 

The report, he disclosed, showed that approximately 40 percent of the volumes credited to crude oil losses were attributable to measurement inaccuracies.

He assured that the Commission was committed to dealing with the issue of metering errors by ensuring that Original Equipment Manufacturers (OEMs) licensed directly as agents would be responsible for the deployment and maintenance of metering facilities across Nigeria’s oil and gas facilities for transparency in hydrocarbon accounting. 

“This reform measure offers a paradigm shift from the trajectory in Nigeria’s hydrocarbon measurement since oil was discovered in Nigeria in Oloibiri in 1956 and it aligns with a fundamental principle of Justice “Let no one be a judge in his own case,” he said.

On operational efficiency, Komolafe said the NUPRC has redesigned its operational processes to be more business-like and accountable, adding that these processes have been streamlined and clarified and staff encouraged to continually challenge the status quo in line with the Commission’s philosophy of continuous innovation and improvement.

To ensure a conducive and peaceful relationship among stakeholders within the Host Community through the implementation of the Host Communities Development Trust under Section 235 of PIA, he said the Commission has collaborated with the relevant stakeholders to develop templates and gazetted regulations, including the Host Community Development Trust (HCDT). 

The essence of the HCDT, he explained, was to integrate oil-bearing communities into the value chain and effectively cater to the development needs of impacted communities, thus positively curbing restiveness in such communities and offer an enabling environment for operators to thrive. 

The expectation from this arrangement, he pointed out, was to guarantee seamless operation, boost investor confidence, and provide an enabling environment for sustainable development of the country’s hydrocarbon resources. 

He expressed happiness that over 60 Host Community Development Trusts have been approved by the Commission, describing it as a milestone in the implementation of the PIA, 2021.

The award presented to the CCE by the Lagos Petroleum Club

In terms of field development programme budget, cost monitoring and benchmarking, the NUPRC Chief said the strategic interventions as a regulator are to translate into a significant reduction in the cost of doing business in the upstream petroleum industry. 

In line with Section 8 of the PIA, he said the Commission was mandated to undertake the commercial regulation of industry operations as well as develop cost studies and benchmarks for the evaluation of upstream petroleum operations.

To improve its cost efficiency, he said the focus on cost reduction as it relates to unit operating cost (UOC) stems from a comparative analysis of other jurisdictions, with the current UOC ranging from $15 (deep offshore) to $25 (onshore/shallow waters). 

The Commission is committed to creating enabling and predictable regulatory environment via the development of regulations that will give meaning and intent to the PIA 2021. 

“In view of that, some priority regulations for the upstream petroleum sector have been developed by the Commission within its short existence. 

“The Act also provides for a consultative forum to be held for the concurrence and input from all stakeholders in the upstream petroleum operations before the finalization of regulations,” he said. 

Already, he said five of the regulations have been completed and gazetted, while 13 other draft regulations have been reviewed with stakeholders and awaiting gazetting.

On initiatives to enhance gas production, he said in line with the Federal Government’s declaration of 2021-2030 as the Decade of Gas, the Commission was taking steps to expand and develop the country’s huge gas resources through enhanced gas exploration, development and utilization schemes. 

This, he said, would ultimately lead to gas reserves’ growth, increased gas production, maturation of the domestic and export gas market, as well as gas flare elimination.

Furthermore, he said in the face of the global energy transition and the need for cleaner sources of energy, gas was being positioned as the immediate transition fuel to lower the country’s carbon emission footprints in line with Nigeria’s climate change commitment.

Out of about 8 billion standard cubic feet per day of gas Nigeria currently produces, he said approximately 20 percent was delivered to the domestic market, while 40 percent was exported to international markets, and 30 percent was utilized for the producer’s internal consumption and the excess gas is flared.

The need to decarbonize the country’s gas production facilities not only requires the right policy direction, but also adequate measurement of all greenhouse gas (GHG) emissions to ensure we achieve our net-zero target by 2060.

Mr Komolafe after receiving his award at the dinner

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