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17 marginal oilfields currently producing in Nigeria – NUPRC
From left; Council Chairman, Society of Petroleum Engineers, Prof. Olalekan Olafuyi (left); Managing Executive, Falcon Corporation, Audrey Joe-EzigThe Nigerian Upstream Petroleum Regulatory Commission (NUPRC) says 17 marginal oilfields are currently producing out of 30 fields awarded since its inception in 1999.
Mr Gbenga Komolafe, Commission’s Chief Executive, NUPRC, made this known at the Association of Energy Correspondents of Nigeria (NAEC) Strategic International Conference
on Thursday in Lagos.
The News Agency of Nigeria reports that the conference has as its theme, “Energy Transition: “Shaping the Future of Nigeria’s Energy Industry, an Appraisal of PIA, Evolving Benefits and Challenges.
”
Komolafe, represented by Mr Abel Nsa, Head, National Oil and Gas Excellence Centre (NOGEC), said marginal fields award was initiated to increase participation of indigenous companies in the upstream sector and build local content capacity.
He said it was also targeted at creating
employment opportunities and
encouraging increased capital inflow to the sector and create employment opportunities.
Komolafe said: “Since its inception, a total of 30 fields have been awarded, 17 currently producing.
“A breakdown of the allocation of the
fields to indigenous operators is as follows: two fields awarded in 1999, 24 in 20032004, one each in 2006 and 2007, and two in 2010.
“10 years after, in 2020, 57 fields
were put up for bidding.
”
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.
“Consequently, we 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, the CCE said the commission had issued six
priority regulations.
He said they 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 the phase two of the exercise in consultation with stakeholders in line with Section 216 of the PIA.
Also, Mrs Audrey Joe-Ezigbo, a former President of Nigeria Gas Association (NGA), said Nigeria must take advantage of the ongoing Russia- Ukraine crisis 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.
”
NewsSourceCredit: NAN
The Nigerian Export Promotion Council (NEPC), on Tuesday said that Nigeria exported over 4. 146 million metric tonnes of non-oil products, worth $2.593 billion from January to June 2022.
The Executive Director of NEPC, Dr Ezra Yakusak, said this while presenting the first half year 2022 progress report to newsmen in Abuja.
According to Yakusak, the figure represents 62.37 per cent increase as against $1.59 billion for the first half year in 2021 and 2020 which stood at $981.442 million, respectively.
He said, “in spite of the global economic recession that affected most businesses in 2021, the sector recorded a significant growth in non-oil export.
“A total of 4,146,534 metric tonnes of product worth $2.593 billion were exported between January and June 2022.
“These figures were culled from the non-oil export performance reports of various pre-shipment inspection agents who are appointed by the Federal Government to determine the volume, value and destination of Nigerian non-oil export.
“The analysis from returns of these pre-shipment inspection agents indicates that the January-June 2022, export performance was the highest half year non-oil export performance since 2018.’’
Yakusak said that over 200 different products, ranging from manufactured, semi-processed, solid minerals to raw agricultural products were reported to have been exported in the period under review.
He said that unlike what was applicable in the past, the trend of products exported from Nigeria was gradually shifting from its traditional agricultural exports to semi- goods.
“This can be gleaned from the following product classification as contained in the PIAs report; manufactured products:
”36.28 per cent, raw agriculture product 33.35 per cent, precious stones 13.22 per cent and others 17.15 per cent,’’ he said.
The NEPC boss said that of the top 15 exported products in the first half year of 2022, recorded 32.49 per cent of total export.
In the same vein, cocoa beans, sesame seed and aluminum ingots contributed 12.65, 7 and 5.07 per cents, respectively.
He added that 572 companies participated in exporting the products in the period under review.
“This is an indication that Nigerian businesses are gradually embracing the diversification campaign of the NEPC by venturing into nonoil exports,’’ he said.
While explaining that there was no incidence of export rejections, Yakusak said that during the period under review, different Nigerian products were exported to 112 countries.
According to him, some of these products were exported to the Americas, Asia, Europe, Oceania regions and Africa.
“Of these figures, Brazil, United States of America (USA) and India were the top three export destinations based on the value of imports.
“Regrettably, of the top 10 export destinations of Nigerian products, none is an African country.
”sOnly Benin and Niger Republic made it to the top 15,’’ he said.
NewsSourceCredit: NAN
Representing the largest energy event to take place in Africa in 2022, the African Energy Week (AEW) 2022 (AECWeek.com) is proud to be joined by the Nigerian National Petroleum Company (NNPC), one of the largest national oil companies (NOC) in the continent.
, as a diamond sponsor.
With the sponsorship, the NNPC will make a strong case for investment in 2022 and beyond, while leading critical discussions on the need to increase exploration and production, the opportunities created through progressive legislation, and the positioning of NOC as the energy companies of the future in Africa.
For years, the NNPC served as an ideal partner for the International Oil Companies (IOCs) in Nigeria, representing the Nigerian government in all matters related to oil and gas.
By driving local content, strengthening the domestic market, and ensuring that Nigerian citizens benefit from the country's oil and gas resources, the NOC served as an example for other NOCs in Africa.
As such, and as a diamond sponsor with an NNPC delegation coming to AEW 2022 in Cape Town, the organization will engage in and lead discussions on the role of NOCs in Africa's energy future, with dedicated NOC forums serving to amplify dialogue and redefine current narratives.
After years of being a NOC, on July 19 this year, NNPC was transformed into NNPC Limited, a fully commercial company with no government funding or control.
The decision to transform the company from a NOC to a private company follows the implementation of the Petroleum Industry Law, enacted in 2021 and focused on improving transparency and productivity throughout the energy sector.
Regulated by the Companies and Allied Matters Act 2020, NNPC Limited will predominantly focus on its role as an operator, prioritizing exploration and production and working closely with IOCs. With the transformation, Nigeria's energy sector has entered a new era of transparency and regulatory certainty, with NNPC Limited expected to grow exponentially as 20% of the organization's profits are reinjected into growing the business.
The transformation comes at a time when Nigerian production has been in decline, due in large part to reduced exploration investment, declining legacy fields and post-COVID-19 impacts.
Now focused on expanding exploration and production, NNPC Limited is ready to make a strong case for IOC investment and involvement in the sector, while setting the tone for other NOCs across the continent.
In this sense, during AEW 2022, NNPC Limited will promote discussions on the impact of an enabling environment and the implementation of a progressive legislature in the energy sector in Africa.
With the PIA and the subsequent transformation of the NNPC, Nigeria has succeeded in establishing a highly attractive and competitive market for regional and international players, while demonstrating the effectiveness of independent African-led developments.
As a patron of diamonds, the NNPC will provide insights into the newly formed organization's plans for 2022 and beyond, while emphasizing the role that NOCs and private oil companies will play in Africa.
“Having NNPC as a diamond sponsor for AEW 2022 is huge.
The sponsorship not only positions the newly privatized company at the forefront of the dialogue, but further cements AEW 2022's role as the continent's premier energy event.
Focused on oil, gas and making energy poverty history, AEW 2022 is committed to strengthening investment and development across the energy value chain.
Once one of Africa's largest NOCs, the NNPC now represents one of the continent's leading independents, driving exploration and production and emphasizing the role African companies will play in expanding the energy sector.
We are proud to host the NNPC as a diamond sponsor and look forward to discussions, agreements and commitments led by the organization,” said NJ Ayuk, CEO of the ACS.
The recent passage of Nigeria's new oil law heralds an exciting new chapter for Africa's energy sector.
But it is complicated.
Oil industry players are set to unpack complex new legislation at the upcoming African Oil Week (AOW) (https://Africa-OilWeek.com).
The recent passage of the Nigerian Petroleum Industry Act (PIA) and the establishment of the Upstream Petroleum Regulatory Commission (NUPRC) (www.NUPRC.gov.ng) mark the beginning of an exciting new era for the energy sector in Niger.
, West Africa and the continent in general.
Regulatory and regulatory clarity is essential for the development of Africa's energy resources and, in particular, the oil sector.
The new Law confirms that Africa is taking control of its own resources and setting the agenda for how they will be deployed.
The passage of the law follows decades of work to evolve the sector in accordance with the needs of the energy business in the industry, the affected communities and the Nigerian economy in general.
However, the act is complicated, its language is ambiguous, and its workings are not yet fully understood.
Global oil industry investors will have the opportunity to inspect the granular details of the event and how they can participate at the upcoming African Petroleum Week, where NUPRC CEO Gbenga Komolafe and other senior Nigerian oil officials will engage with parties.
interested in the new distribution.
Nigeria's oil industry has grown significantly and the energy landscape has changed tremendously, hence the need for a new approach.
Nigeria remains the leading oil producer in Africa, producing 86.9 metric tons (https://bit.ly/3QFxEca) during 2020.
At the same time, oil plays an important role in Nigeria's national economy.
, with the oil and gas sector accounting for around 5.8% of the country's GDP (https://brook.gs/3AqpBdN) and 95% of its foreign exchange earnings in 2019.
Passage of the law has been produced with a renewed assertiveness in the Nigerian oil sector.
, with reallocation of underdeveloped assets (https://bit.ly/3QxbU2p) and NUPRC CEO Komolafe noting (https://bit.ly/3SZKc06) a commitment to create synergy and smooth industry operations in the national interest.
“The Commission is very deliberate in identifying and promoting new projects and new field developments to boost domestic oil production,” says Mr. Komolafe.
"We will continue to work with all stakeholders in these strategic areas."
The new PIA dispensation will allow for a more efficient and sustainable allocation of Nigeria's oil assets in the best interest of Nigerians and Africans in general.
That said, the new environment is profoundly complex and the scope of the new regulations is very broad.
The NUPRC, for example, is tasked with ensuring compliance with petroleum laws, regulations and guidelines, as well as monitoring operations at drilling sites, wells, production platforms and flow stations, crude oil export terminals , refineries, storage tanks, pumping stations, retail stores.
outlets and pipes.
It must also supervise all petroleum operations carried out under license in the country, monitor operations to ensure that they are in line with national goals; ensure compliance with health, safety and environmental standards; maintain records on oil reserves, production, licenses and leases; advising the government on technical and policy matters, processing license applications; collect government revenue and maintain and manage the National Data Repository (NDR).
In addition to the NUPRC, the Petroleum Act also established the Nigerian Downstream and Intermediate Petroleum Regulatory Authority (NMDPRA) (https://www.NMDPRA.gov.ng).
Together, these authorities are responsible for the technical and commercial regulation of oil operations in their respective sectors, and have the power to acquire, own and dispose of assets.
The Act provides for the Nigerian National Oil Company to be managed as a quasi-commercial company, with its shares held jointly by the finance and oil ministries.
The Act also establishes the Host Community Development Trust Fund (HCDTF), which is geared towards providing social and economic benefits to host communities where oil resources are located, and to enhance peaceful coexistence between licensees or tenants and host communities.
The PIA also establishes a tax on hydrocarbons, which will tax the income from land-based resources of oil companies, such as crude oil, condensates and natural gas liquids.
The broad area of liability covered by the PIA, and the use of terms that have not yet been clarified in court, makes it a complicated piece of legislation that deserves further explanation.
Energy players will have the opportunity to unpack the regulations and have their implementing authorities explain them at the upcoming Africa Oil Week event, to be held in Cape Town in October.
“Nigeria should be commended for the progress it has made in codifying the terms for the exploitation of its oil assets,” says Paul Sinclair, vice president for energy and director of government relations at AOW.
“However, the global oil industry is clamoring for the opportunity to get more clarity on the new laws.
We hope to do just that, at Africa Oil Week.”
Introduction
On July 19, 2022, the Nigerian government made an official announcement confirming the complete transformation of the Nigerian National Petroleum Corporation (NNPC) into NNPC Limited (NNPCL).
NNPCL is a brainchild of the Nigerian Petroleum Industry Act (PIA) which was passed into law in August 2021 [1].
The NNPC was a state-owned and controlled corporation licensed to operate in the country’s petroleum industry which utilized the country’s fossil fuel and natural gas reserves by partnering with foreign oil companies.
The new NNPCL, while still wholly owned by the State, is intended to operate as a fully commercial venture without government funding (besides the initial capitalization) or control and is expected to be regulated by the Companies and Allied Matters Act 2020 [2].
In addition, NNPCL will now declare dividends to shareholders while retaining 20 percent of profits to grow its business [3].
NNPCL is expected to sometime in the future [4], invite the public to purchase shares to raise equity capital for the business of the company especially as it would no longer have access to state funds in line with the objective to commercialise the corporation.
It is also expected that NNPCL would eventually achieve trading status on global stock exchange markets like its counterparts, including Saudi Arabia’s Arabian American Oil Company (ARAMCO) Brazil’s Petróleo Brasileiro (Petrobras) to name a few.
NNPCL will also no longer be concerned with issues of petrol pricing and subsidy, neither will it continue to remit funds into the Federation Accounts Allocation Committee (FAAC) such that the company funds can be used to further its business rather than issuing national payouts.
Yet, while the introduction of the NNPCL promises to be advantageous to the country’s energy industry, realistically speaking, there are certain challenges that need to be promptly and properly addressed for the new NNPCL to function effectively and achieve its objectives.
To mention a few, continued government influence, NNPC’s transfer of liabilities to NNPCL, corporate governance issues are at the top of concerns.
Government influence concerns
Unlike its state-owned counter parts Saudi’s Aramco and Petrobras of Brazil, the former NNPC had a structure that largely depended on government funding thus making it less competitive and less attractive to global investors especially International Oil Companies (IOCs) who were uncomfortable doing business with the Corporation due to fears of undue government influence, grotesque policies and unnecessary bureaucratic delays.
While the new NNPCL is promised to be fully independent of government control, it remains wholly owned by the government and its initial capital will be completely provided by the government per the provisions of the PIA [5].
Section 53(5) of the PIA also provides that all shares of the company held by the government will not be transferable or mortgaged unless approved by the government and the National Economic Council.
To own is to control in any business enterprise so it is unclear how government influence would be avoided in NNPCL when it is wholly owned and capitalized by the government.
A better approach would be to provide for a mechanism that splits the shares between the government and the public in a particular ratio such that while the government may understandably retain controlling shares to protect national interest [6] there are checks and balance measures in place to avoid arbitrariness.
Furthermore, the PIA incorporates an automatic transfer of all existing employees under the former NNPC into the new NNPCL with no vetting procedure for these employees in place.
Section 57(1) under discuss states as follows:
Upon incorporation of NNPC Limited under section 53 of this Act, employees of NNPC and its subsidiaries shall be deemed to be employces of NNPC Limited on terms and conditions not less favourable than that enjoyed prior to the transfer of service and shall be deemed to be service for employment related entitlements as specified under any applicable law.
This means that NNPCL will have substantially the same employees as the former NNPC which is tantamount to pouring new wine into old wineskins.
It is understandable that the law makers were wary of leaving the employees of the former NNPC redundant upon the transition.
However, the automatic retention of former NNPC staff is counterproductive because NNPCL essentially inherits its all of its predecessor’s employees, some of whom are controversially unqualified and redundant thereby stunting its growth potential.
The PIA goes further to provide for the appointment of a Board of the NNPCL whose appointment shall be done by the President of the country [7].
Another interesting provision is Section 58(2)(r) which provides that the Board should among others consist of ‘six (6) non-executive members with at least 15 years post-qualification cognate experience in petroleum or any other relevant sector of the economy, one from each geopolitical zone’ effectively politicizing the appointment of these individuals to the board as opposed to appointments strictly based on merit.
Perhaps realizing that the previous provisions on appointment to the new NNPCL Board may be inconsistent with the new NNPCLs ‘no government influence’ mandate, the law makers included a proviso in Section 58(5) stating that the provisions of the section would only apply where NNPCL remains wholly owned by the government after which the composition would then be determined by the new shareholders after sale of shares to the public.
This may appear to resolve the evident problem, however the shares of the new NNPCL will not be made available to the public until an unknown time in the future which is not specifically stipulated under the Act.
Although NNPCL’s Chief Executive Officer intimated that the company would be ready for an Initial Public Offering (IPO) mid 2023, this is not set in stone as factors such as governmental and bureaucratic delays in organization may extend this timeline.
Afterall, it did take almost a year to fully effect the provision to incorporate the new NNPCL as opposed to the 6 months timeline stipulated in the PIA.
In any case, even if there are no delays in the estimated timeline for the sale of shares to the public, the IPO process, appointment of new Board members and other corporate procedure could take months at the earliest to effect.
This means that the NNPCL would still be run by old NNPC officials pending formalization of all corporate procedures thus making the new NNPCL ‘government’ run for at least the foreseeable future.
Effectively, this results in NNPCL failing its first mandate as a fully commercialized company i.e to be free of government influence and control.
Transfer of liabilities
Another concern is the provision of the PIA which transfers liabilities from the old NNPC to the new NNPCL.
This is provided for under Section 54(1):
the Minister of Petroleum and the Minister of Finance shall within 18 months of the effective date determine the assets, interests and liabilities of NNPC to be transferred to NNPC Limited or its subsidiaries and upon the identification, the Minister shall cause such assets, interests and liabilities to be transferred to NNPC Limited.
Further provisions of the section discuss issues of assets that would remain with NNPC or the government, actions that may be brought against NNPCL, NNPC or the government etc.
However, the mechanism for the determination of which assets and liabilities would pass on to NNPCL and which would be dealt with by the old NNPC/Government are not stipulated in the PIA, leaving much to the discretion of the Minister for Petroleum and Finance with some assistance from the Attorney General of the Federation in peculiar circumstances.
Section 54(2) states as follows:
Assets, interests and liabilities of NNPC not transferred lo NNPC Limited or its subsidiary under subsection (1), shall remain the assets, interests and liabilities of NNPC until they become extinguished or transferred to the Government and six months following the determination under section 54 (1) of this Act, the Minister, the Minister of Finance and the Attorney-General of the Federation shall develop a framework for the payment of the labilities not transferred to NNPC Limited and if such determination for which assets, interests and liabilities to be transferred has not been concluded within the stipulated period of 18 months, all the assets, interests, liabilities of NNPC is deemed to be transferred to NNPC Limited after 18 months from the effective date.
A spruce way to deal with the inherited assets and liabilities from NNPC would have been to make provision for the creation of an SPV to specifically deal with these issues, especially with respect to the liabilities rather than burden the NNPCL with the old NNPC’s mammoth liabilities in its formative years when it should be focused on its growth.
It is hoped that the Ministers would devise suitable mechanisms to deal with these in the most efficient and least invasive way possible.
Corporate Governance considerations
As a corporate entity, NNPCL will be governed by Nigeria’s corporate laws as enshrined in the Companies and Allied Matters Act (CAMA).
Of particular importance are some of the corporate governance principles contained in CAMA which are there to ensure international best practice in the day-to-day operations of Nigerian corporations including provisions on separations of the role of Chairman and Chief Executive Officer, appointment of Independent Directors, limitation of multiple directorships, disqualification from appointment as a director, disclosure provisions among others.
It is expected that upon the IPO of NNPCL, it would become a Public Limited Liability Company (Plc) and thereby subject to more stringent corporate governance and disclosure policies even beyond the statutory requirements under CAMA [8].
Some of the corporate governance sections under CAMA include provisions which state that every public company must have at least three (3) independent directors appointed in line with the required qualifications stipulated; [9] Directors may not serve on the board of more than five (5) public companies at a time; disqualified directors now include directors that were removed from the Board; [10] and attendance of Board meetings is now a factor for re-election [11].
On its disclosure obligations, NNPCL is expected to ensure that information on the Memorandum and Articles of Association of the company is accessible to the public and potential investors.
The shareholding structure [12], shareholders [13], authorized share capital, exact date of incorporation e.t.c all need to be fully disclosed to the public to ensure compliance with the provisions of the PIA and CAMA.
Records of the minutes of the meeting where the first directors are appointed, board resolutions for the nomination of the Chairman e.t.c all need to be public knowledge to ensure complete transparency and fulfil all international best practice disclosure obligations.
Worthy of note is Section 60-63 of the PIA which attempts to cater for some corporate governance concerns of the new NNPCL.
However, the provisions seem to be merely advisory and no liabilities are imposed for any failure to carry out such responsibilities.
Thus, recourse is to be had to CAMA and its regulatory body, the Corporate Affairs Commission (CAC) for the enforcement of these provisions in addition to the provisions of CAMA.
Conclusion
On the whole and having considered some salient issues with respect to the new NNPCL, there are some who believe that the transformation of the NNPC into NNPCL is merely a name change and that there would be no material difference from the old structure especially as the NNPC has operated as a highly institutionalized corporation for the last 45 years.
Whether they are right or wrong, only time will tell.
However, it is important to remain optimistic that with the right corporate administration, NNPCL can create an environment that would not only grow the country’s economy but also attract both local and foreign investment thereby making it a major player in the global energy market.
[1] Section 53(1) of the PIA states that ‘The Minister shall within six months from the commencement of this Act, cause to be incorporated ender the Companies and Allied Matters Act, a limited liability company, which shall be called Nigerian National Petroleum Company Limited (NNPC Limited)’
[2] Section 64 of the PIA lists the objectives of the NNPCL.
[3] Section 53(7) of the PIA
[4] NNPCL’s Chief Executive Officer at the official announcement of the new NNPCL intimated that the company would be ready for an Initial Public Offering by mid 2023.
Retrieved from https://bit.ly/3c1Hk1V on August 1, 2022.
[5] Section 53(2-4) of the PIA states that ‘The Minister shall at the incorporation of NNPC Limited, consult with the Minister of Finance to determine the number and nominal value of the shares to be allotted, which shall form the initial paid-up share capital of NNPC Limited and the Government shall subscribe and pay cash for the shares (3) Ownership of all shares in NNPC Limited shall be vested in the Government at incorporation and held by the Ministry of Finance Incorporated and the Ministry of Petroleum Incorporated in equal portions on behalf of the Federation and the Ministry of Petroleum Incorporated is incorporated under the provisions of the Eighth Schedule to this Act (4) The Ministry of Finance Incorporated and the Ministry of Petroleum Incorporated in consultation with the Government, may increase the equity capital of NNPCL.
[6] Section 1 of the PIA provides that the property and ownership of petroleum within Nigeria and its territorial water, continental shelf and exclusive economic zone is vested in the Government of the Federation of Nigeria.
[7] Section 58(2) of the PIA.
[8] That is, Nigerian Code of Corporate Governance (NCCG) issued in 2018 by the Financial Reporting Council of Nigeria (FRCN) and the Securities Exchange Commission Guideline’s (SCCG) and revised reporting template issued in 2021.
[9] Section 275 of CAMA 2020.
[10] Section 283(c) of CAMA 2020.
[11] Section 284(2) of CAMA 2020.
[12] In compliance with section 53(2) which provides that The Minister shall at the incorporation of NNPCL consult with the Minister of Finance to determine the number and nominal value of the shares to be allotted, which shall form the initial paid-up share capital of NNPCL and the Government shall subscribe and pay cash for the shares.
[13] In compliance with Section 53(3) of the PIA which states that ownership of all shares in NNPCL shall be vested in the Government at incorporation and held by the Ministry of Finance Incorporated and the Ministry of Petroleum Incorporated in equal portions on behalf of the Federation and the Ministry of Petroleum Incorporated is incorporated under the provisions of the Eighth Schedule to this PIA.
The ExxonMobil Nigeria has expressed commitment to maintain a significant Deepwater presence in Nigeria for the next 20 years to unlock potential value in its renewed Oil Mining Leases (OMLs)
The Execute Director and General Counsel, ExxonMobil Nigeria, Adesua Dozie, disclosed this to the News Agency of Nigeria on Sunday in Abuja.
NAN reports that the Nigerian National Petroleum Company Limited (NNPC Ltd) and its partners in the OMLs on Friday executed fully termed agreements for renegotiated Production Sharing Contracts (PSCs).
The renegotiations will put to rest the protracted dispute between the NNPC Ltd. and the Contractor Parties in OMLs 125, 128, 130, 132 and 133, as well as 138 PSCs.
Under this development, the ExxonMobil Nigeria renewed its OMLs 133 (Erha) and 138 (Usan) deep-water leases for a further 20-year period.
The Petroleum Industry Act (PIA) 2021 gave the NNPC Ltd. the legal backing to renegotiate all its existing PSCs in conformance to the provisions of the new Act within a one year period.
The PIA, in Section 311(2) stipulates that new PSCs agreements under new Heads of Terms should be signed between NNPC Ltd. as Concessionaire and her Contractor Parties within one year of signing the PIA into law.
This provision paved the way for the resolution of lingering disputes which created investment uncertainty and stifled new investments in the nation’s deep offshore assets.
The renewed PSCs would generate 10 billion barrels of oil cumulatively, unlock opportunities within the Nigeria upstream sector, enhance revenue, inflow of Foreign Direct Investments and expand access to affordable energy and job creation.
Speaking with NAN, the General Counsel described the renewed agreements as fantastic and exciting deal, after many years of dispute, adding that it would bring additional investments and spur economic growth.
She expressed satisfaction over the implementation of PIA 2021 which recognised the potential and future for the deep water businesses in Nigeria.
“As for my company, what this means is significant deep water presence for our company in Nigeria for the next 20 years,” she said.
The company, in its twitter handle, @Exxonmobil -NG had announced the renewals of its OMLs 133 (Erha) and 138 (Usan) deep-water leases for a further 20-year period.
“This includes extensions of Production Sharing Contracts with our partner NNPC Ltd.
“These renewals validate ExxonMobil Nigeria’s earlier commitment to maintain a significant deep-water presence in Nigeria, via Esso Exploration and Production Nigeria (Deepwater) Limited (EEPNL),” the company said.
ELLA
NewsSourceCredit: NAN
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) says it will adopt new approach in the administration of licences and leases, especially as it concerns acreage allocation, to attain the objectives set by the Petroleum Industry Act (PIA).
The Chief Executive Officer (CEO) of NUPRC, Mr Gbenga Komolafe, said in a statement on Friday that the new approach would optimise value in the new acreage management and administration of allocation principles enunciated in the PIA.
“To position the Commission on a performance centred paradigm for acreage management, a new strategy of acreage allocation, management and administration based on a holistic assessment of the prior performance of all licences and leases awarded prior to the PIA is required,” he said.
According to Komolafe, the commission will 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.
The commission would also seek to identify other issues, including acquisition of data, drilling of wells and maturing of identified leads and prospects within the licence or lease span.
The CEO in a memo to senior management staff of the commission, also listed the aspects of the new strategy to include review assignee performance and contributions to licences and lessees and review compliance performance in reporting milestones by licensees and lessees and the administration of regulatory consequence mechanisms.
Other aspect of the new strategy would include to review loss allocation by licensees and lessees under the PIA.
These include production, cost and revenue, as well as performance review of existing multi-client arrangements and streamlining ongoing activities to the PIA.
“The assessment framework will require all existing licences 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 OPLs, OMLs, Marginal Fields and Multi client arrangements.
“Evaluation is expected to cover the following: Compliance with environmental requirements and with work programme commitments, compliance with revenue payment obligations and reporting obligations.
Others are audit of operation systems and third-party provider activities and assessment of assignee roles and performance obligations.
”
“In the new dispensation, there will be need for a team with representation from relevant departments to achieve performance schematic of existing licences and leases; identify oversight weakness, identify licencee and lessee centred failures in regulatory reporting requirements and other performance indices.
“Also in the new dispensation, there will be improved 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 will 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, is expected to submit a final report by Aug. 30.” the statement further quoted Komolafe as saying.
NewsSourceCredit: NAN
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) says it is working to ensure issuance of midstream and downstream petroleum regulations for industry’s growth.
The authority said that when the regulations were finally published, they would be required to be gazetted by the Ministry of Justice.
Mr Ogbugo Ukoha, the Executive Director, Distribution Systems, Storage and Retailing Infrastructure, NMDPRA, made this known on Thursday in Abuja at the end of its stakeholders’ consultation forum on regulations.
The forum which opened on August 1, was attended by stakeholders from Chevron, TotalEnergies and Major Oil Marketers Association of Nigeria to bequeath the industry with laws and policies to enable investment in the sector.
The 10 regulations considered by the stakeholders were; Gas Pricing, Domestic Demand and Delivery Regulations; Natural Gas Pipeline Tariff Regulations and Midstream and Downstream Decommissioning and Abandonment Regulations.
The regulations included Environmental Regulations For Midstream And Downstream Petroleum Operations In Nigeria; Midstream and Downstream Environmental Remediation Fund Regulations and Midstream and Downstream Gas Infrastructure Fund Regulations.
Others are Petroleum (Transportation And Shipment) Regulations; Assignment and Transfer of Licences and Permits Regulations; Petroleum Pipeline Regulations and Midstream and Downstream Petroleum Operations Regulations.
Ukoha said the first traditional requirement of the authority as a regulator was to engage with stakeholders to propose draft regulations to people, consult and review their feedback before issuing the regulations.
According to him, the Petroleum Industry Act (PIA 2021) captured this process and required that it has to publish the regulations and after 21 days invite the stakeholders to listen and make considerations.
“So, we released 10 draft regulations across board and two more draft regulations but the consultation we were just concluding was for the 10 regulations.
“We got rich and intensed feedback from stakeholders, what is left for us to do now is to go back and reflect on it and utilise the good part ultimately for the benefit of Nigerians and growth of the industry.
“The reviewed regulations will be forwarded to the ministry of justice after for gazetting,” he said.
Ukoha said the regulations which were published online firstly got hundreds of rich written responses from stakeholders while the three syndicates group established at the forum made considerations and challenges clarified.
The director explained that the authority was mindful of the timeline set by the PIA itself.
NewsSourceCredit: NAN
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) says it has
placed focus on four cardinal areas for sustainable gas development and utilisation in the country.
The commission said that the four cardinal areas were gas reserves growth, optimised gas production, domestic gas utilisation and gas flare elimination.
Mr Gbenga Komolafe, Commission’s Chief Executive, NUPRC, made this known at the 2022 Society of Petroleum Engineers (SPE) Nigeria Annual International Conference and Exhibition (NAICE) on Monday in Lagos.
The News Agency of Nigeria that the conference had as its theme: “Global Transition to Renewable and Sustainable Energy and the Future of Oil and Gas in Africa.
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Komolafe, represented by Mr Abel Nsa, Head, National Oil and Gas Excellence Centre (NOGEC), urged other African countries to adopt suitable anchor points and roadmaps similar to what had been outlined by the commission.
According to him, this will enable them to achieve the right energy mix while decarbonising their oil and gas development.
He noted that Nigeria had huge abundant gas resources which had been adopted by the country as its energy transition fuel.
Komolafe said the passage of the Petroleum Industry Act (PIA) 2021 was aimed at eliminating bottlenecks in the oil and gas sector to attract more investments.
He said: “We are positioning gas as our transition fuel while adopting phased down approach in our energy transition quest geared toward paying greater attention to the development of untapped gas resources.
“This energy source with low carbon footprint would serve as the transition fuel in meeting our energy security as a nation.
“Fortunately, several African countries including Nigeria, Algeria, Mozambique, Egypt and Libya, among others are blessed with huge gas reserves.
“With a total of over 620 trillion cubic feet of natural gas reserves and 125.3 billion barrels of crude oil, the future of upstream oil and gas in Africa is promising.
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Komolafe, however, noted that it required the right legislative framework and a change in policy direction for maximum economic recovery and energy sustenance.
He added that the PIA had generous fiscal provisions aimed toward attracting investment not just for oil development but for harnessing of the rich gas potential of the nation which was among the highest in the world.
Also, Prof. Olalekan Olafuyi, the Chairman, SPE Nigeria Council, said the world was facing the challenges of balancing the urgency of transition to cleaner energy with the obvious energy deficit and economic challenges experienced in recent times.
Olafuyi said: “It is expected that the adaptive strategies for energy transition should be adopted in Africa.
“The status quo in the African energy supply is very obvious.
Africa and Nigeria in particular, are still struggling with endemic energy poverty as compared to the developed regions of the world.
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He said this was further worsened by the divestment by major international operators and funding challenges for oil and gas businesses.
“This leaves the indigenous stakeholder in a situation of choosing to continue with the oil and gas business or channeling the attention to renewable energy sources.
“This question is in the mindset of stakeholders in the energy business and policy space are the main reason we are here at this conference,” Olafuyi said.
NewsSourceCredit: NAN
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has bega n to review the midstream and downstream petroleum regulations to bequeath the industry with laws and policies to enable investment in the sector.
Chief Timipre Sylva, Minister of State for Petroleum Resources at the NMDPRA stakeholders’ consultation forum on regulations on Monday in Abuja said the regulations had been shared with stakeholders for review and input.
The News Agency of Nigeria reports that the 10 regulations to be considered are: Petroleum (Transportation and Shipment) Regulations and Assignment and Transfer of Licence and Permit Regulations.
The regulations include Midstream and Downstream Petroleum(Operations) Regulations; Petroleum Pipeline Regulations; Gas Pricing Domestic Demand and Delivery Regulations; and Natural Gas Pipeline Tariff Regulations.
Others are Midstream and Downstream Decommissioning and Abandonment Regulations; Environmental Regulations for Midstream and Downstream Operations; Midstream and Downstream Gas Infrastructure Fund Regulations and Environmental Remediation Funds Regulations.
“We are now at the point of engagement and interaction with a view to issuing regulations that would benefit all stakeholders,” the minister said.
The minister said that with creation of the Petroleum Industry Act of 2021, the authority was saddled with the responsibility of technically and commercially regulating both the mid- and down-stream operations in the sector.
He said the review was in fulfillment of the provisions of Sections 33 and 216 of the PIA 2021.
This, he said mandated NMDPRA to consult with relevant stakeholders prior to finalising regulations concerning the processing, refining, transmission, distribution, supply, sale and storage of petroleum products, or any other matters deemed expedient.
“This administration understands the need to have an all-encompassing, well thought-out, and unambiguous regulatory instruments that are painstakingly developed to meet the present and future aspirations of the government.
“The regulations are required to attract much needed investments and create opportunities in the sector; hence the need for stakeholders participation and engagement in developing regulations, processes and procedures.
“Prior to this event, the authority has initiated and proposed ten different regulations which span operations, pricing and environmental management, in line with its statutory mandate.
“Whilst noting that the current state of our local energy landscape is dire and is in need of ingenious solutions, we have an opportunity to ameliorate the situation through these sets of regulatory instruments,” he said.
He said that the regulations would provide clarity and certainty for investors, promote and build investor confidence, increase and improve foreign and indigenous participation in these sectors, and optimise value for all stakeholders.
These, he said would cumulate into enablement of businesses, growth of the industry and creation of myriads of opportunities for Nigerians.
Mr Farouk Ahmed, Authority Chief Executive, NMDPRA in an address said this innovation, amongst others in the PIA, aligned with the vision and commitment of President Muhammadu Buhari and the minister of state.
Ahmed, while extending appreciation to the ninth National Assembly who ensured the passage of the PIA, said Section 216 of the PIA mandated the authority to ‘consult with stakeholders prior to finalising amendments to regulations.
However, he said it did not consider this an obligation or box-ticking exercise as continuous engagement with its stakeholders to enable their business was at the core of its regulatory philosophy.
“Accordingly, our priority will be to ensure these regulations are primary enablers of the Federal Government’s Decade of Gas initiative and will help catalyse investment and enhance the attractiveness of the domestic gas value chain,” the NMDPRA boss said.
In a remark, Chairman Senate Committee on Petroleum (Downstream), Sen. Sabo Mohammed, said the passage into law of the PIA was a watershed in the legislative history of the nation.
Mohammed, represented by its Vice Chairman, Sen. Philip Aduda, said it was expected that, as secondary legislation, the regulations would complement the PIA in unlocking the vast potential of the midstream and downstream sector.
NewsSourceCredit: NAN
