Tag: NUPRC

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Monday, May 13, announced its commencement of the 2024 Nigeria Petroleum Licensing Round and resumption of 2022/2023 with 12 oil blocks for offer.

This was contained in a statement by the commission chief executive, Gbenga Komolafe issued in Abuja.

He said: “Announcement of the commencement of the 2024 Nigeria Petroleum Licensing Round and resumption of 2022/2023 Mini Bid Round On behalf of the Federal Government of Nigeria, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is pleased to announce the commencement of the 2024 Petroleum Licensing Round.”

On the number of blocks for the offer, Komolafe noted: “We have identified twelve (12) blocks that cut across deep offshore, shallow water and onshore terrains to be made available to interested investors.”

According to him, this licensing round marks a significant milestone in our commitment to fostering sustainable growth and innovation within the energy sector, while providing economic opportunities for investment to spur new exploration, and development activities within our Petroleum landscape.

He explained that the 2024 Licensing Round represents an opportunity for both domestic and international stakeholders to engage in the exploration and development of Nigeria’s hydrocarbon resources.

He added that central to this, is the availability of high-quality geological and geophysical data.

Komolafe said the National Data Repository (NDR) of NUPRC, in collaboration with multi-client partners, is committed to providing access to extensive and robust datasets to prospective bidders to enhance their decision-making.

Commenting on the offer of 12 blocks, he said in line with the objectives of the licensing round, the offer comprises a diverse range of exploration prospects and discoveries with varying technical and operational preferences.

Komolafe added: “Our goal for this licensing round is to harness innovative exploration techniques and foster partnerships that will enhance our production capabilities and ensure environmental sustainability.

“We anticipate that this initiative will not only expand our operations but also significantly contribute to the global energy supply, aligning with international energy security goals.”

Emphasizing a holistic approach to resource management, he said the 2024 Licensing Round prioritizes environmental, social, and governance (ESG) considerations.

 NUPRC, he said, is committed to ensuring that exploration activities are conducted in a manner that minimizes carbon emissions and mitigates environmental impact.

Read Also: NUPRC gives investors two options for divestment of 26 oil blocks

The NUPRC boss noted that by incorporating ESG criteria into the licensing process, stakeholders can contribute to sustainable development while harnessing the nation’s natural resources responsibly.

According to him, the success of the 2024 Licensing Round hinges on collaboration among all stakeholders, including government agencies, industry players, and local communities.

He said by fostering a conducive investment environment and promoting best practices in resource management for shared prosperity.

Komolafe also noted that the 2024 licensing Round is the second in a series of bid rounds and will be managed by NUPRC under the provisions of the Petroleum Industry Act 2021 (PIA).

He said the PIA provides enhanced legal and regulatory rules that encourage and promote investment for the mutual benefit of the people of the Federal Republic of Nigeria (FRN), international and national investors, and the host communities while ensuring environmental sustainability.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has given two conditions for divesting 26 oil blocks from four International Oil Companies (IOCs) to four indigenous firms.

The four companies are Mobil Oil Producing Nigeria Unlimited (MPNU) Shell Petroleum Development Company (SDPC), Nigerian Ship Oil Company (NAOC), and EQUINOR.

Speaking in Abuja during his dialogue with industry players on the divestment, the commission’s Chief Executive, Gbenga Komolafe listed the options.

Listing the conditions, he said, to achieve the divestment, the divesting entities to either agree to grant Ministerial consent to divestments in the condition to retain the liabilities until the conclusion of the NUPRC investigation for liabilities to be allocated to the proper party.

The second option, according to him, is that the divesting firms can agree that ministerial consent will not be granted until the Commission has identified and assigned all liabilities to the capable party.

He said: “The Commission is proposing that the divesting entities should either agree to the grant of Ministerial consent to the divestments, on the condition that they will retain the Liabilities until the Commission’s investigation is concluded and the liabilities are allocated to the proper party.

“In this case, the divesting companies will be required to issue an undertaking to retain the liabilities until confirmation of the release by the Commission of all or part of the retained liabilities. Alternatively, the divesting entities can agree that Ministerial consent will not be granted until the Commission has identified and assigned all liabilities to the capable party.

“In this situation, the divesting entities will also be required to issue a waiver, waiving their rights to deemed consent as provided in Section 95 (7) (b) of the PIA.”

NUPRC advised the divesting parties to indicate their preferred option and issue the applicable instrument within two weeks of the date of this Workshop.”

The first option, said Komolafe, would lead to the conclusion of the divestment exercise in June while the second option could culminate in the completion of the exercise in August.

He explained to reporters that, “What we have done in effect is that we came up proactively with two options and the difference between the two is the fact that one is that one would take a shorter time and the other one will take a longer time.

Read Also: NUPRC evaluates Shell’s divestment assets

“Given the fact that we need to conduct proper due diligence in line with this divestment regulatory framework that we have put in place.

“We have assured the industry, we came with the leading global experts that we are working with for the approval of Mr. President to ensure that the financial liability arising from legacy operations of the assets are transparently determined for the financial body which we don’t want the nation to undertake.”

Earlier, he noted that the workshop was to give insight and guidance, as well as consider due diligence and interrogation on compliance with the laws and processes that govern the proposed divestment of oil and gas assets by International Oil Companies to indigenous companies. 

He said: “A total of 26 blocks are proposed to be divested. These blocks have an estimated total reserve of 8.211 million barrels of oil, 2,699 million barrels of condensate, 44,110 billion cubic feet of associated gas, and 46,604 billion cubic feet of non-associated gas. This is a significant contribution to the nation’s hydrocarbon resources. Additionally, these blocks contain P3 reserves estimated at 5,557 million barrels of oil, 1,221 million barrels of condensate, 14,296 billion cubic feet of associated gas, and 13,518 billion cubic feet of Non-Associated Gas. 

“It is worth noting that a substantial part of the P3 reserves is located in or near producing assets.

“This means that a competent successor could easily mature them to 2P reserves. Additionally, the current average production from these blocks is 346,290 barrels per day (bpod) (NAOC-28,018 bopd, MPNU-159,378 bopd, EQUINOR-36,155 bopd and SPDC-122,739 bopd), but the technical production potential is much higher – standing at 643,054 barrels (NAOC-147,481 bopd, MPNU-244,268 bopd, EQUINOR-39,203 and SPDC-212,102 bopd).”

He insisted that these blocks have the potential to significantly boost national production for the benefit of all stakeholders.

According to the NUPRC boss, the exercise will lead to boosting crude oil production with additional 700,000 barrels per day.

He was hopeful that the step will make Nigeria exceed its present OPEC quota.

Speaking, the Independent Petroleum Producers Group (IPPG), chairman, Abulrazak Isah, said crude oil production in the country has been declining because of the stoppage of the divestment process.

He was optimistic that latest by August the would-be investors would have started contributing to the nation’s crude oil profile.

“Part of the reason that that continues to happen is because you have stalled this divestment process. I am happy today that by the end of August, depending on the option we take this process will come to an end and our members will move into these assets and we will increase our crude oil production in the industry,” said Isah.

The chairman added that “it is not in our best interest to see our oil production level continue to go down.”

He said they were pleased that the NUPRC gave them options to choose from.

He commended Komolafe and the commission, stressing that there is clarity about the divestment.

He said the two options of June and August were very heartwarming because his members have been involved in the process for more than three years.

He said they are indigenous companies that have evolved because of government policy.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Monday, April 29, revealed that it has begun the 2024 marginal fields bid round for 17 oil blocks.

The NUPRC’s chief executive, Gbenga Komolafe, who broke the news at the First Edition of the Nigerian Extractive Industries Transparency Initiative (NEITI) in Abuja, added that the process will end by January 2025.

He said: “It is my pleasure and honour to announce to you that the 2024 licensing round as prescribed in the Petroleum Industry Act will commence from the end of this month and will be in the market.

“The process has commenced and we set very clear criteria that will guide the implementation of the process from beginning to end in a transparent manner.”

Asked how many blocks are for the offer, he said currently there are 12 blocks in addition to the seven blocks that their bid round was not completed in from the 2022 process.

Although seven plus 12 should have been 19 blocks, he insisted 17 blocks are offered in the 2024 bid round.

Komolafe said: “As it relates to the 2024 bid process we are currently putting on offer 12 blocks.

“But I need to recall that remember that we commenced a bid process in 2022, where we put seven deep offshore assets on offer but as the termination (completion date) was close to the last election we had to put a hold on it for the bid not to near the political process.

“But right now we are completing that process and we equally have 12 new bid rounds in the ongoing process. So, in totality, we target to complete 17 blocks on offer between now and early next year.”

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He disclosed that currently, the commission is making a comprehensive review of awarded assets that are underperforming and those that have not been brought to maturity.

“What we are doing is to bring them to a competitive bid process,” he insisted.

The Chief Executive Officer noted that crude oil production is now about 1.5 million barrels per day, and the commission is making efforts to rev it up with the Organization of Petroleum Exporting Countries (OPEC) 1.74mbd quota for Nigeria.

He lamented that before the enactment of the Petroleum Industry Act (PIA), the oil and gas sector was only designed in a manner that had no emphasis on value addition to crude oil production and export.

He said: “Unfortunately, our upstream is designed in a manner that crude oil is just exported without value addition.”

Komolafe insisted that there should be a reversal of that design of the “load and go approach.”

According to him, the commission is determined to ensure that local refineries must have feedstock.

He revealed that NUPRC has given Dangote Petroleum Refinery its rule of engagement in place for refiners.

The CEO added: “We want to have a turnaround in which our refining capacity must be stepped up.”

Asked whether the commission is ready to provide a letter of guarantee to refineries to tender to their international creditors for loans for feedstock purchase, his answer was negative.

He described the establishment of a refinery as a commercial engagement or transaction thus, the NUPRC cannot be the one to offer them a guarantee.

Komolafe however noted that the commission has put in place a domestic crude oil supply obligation.

He said the NUPRC will always ascertain the domestic refining capacity and make it obligatory for the producers to meet the figure.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on April 29, began due diligence for the divestment of the Shell Petroleum Development Company (SDPC) assets of total crude oil and condensate 6.73billion barrels reserves to Renaissance Africa Energy Company Limited (Renaissance).

Speaking at the NUPRC -SPDC divestment workshop in Abuja, the Commission’s Chief Executive, Gbenga Komolafe said: “The assets being considered have an estimated total reserve of 4.96 billion barrels of oil, 1.77 billion barrels of condensate, 28.16 trillion cubic feet of associated gas and 28.11 trillion cubic feet of non-associated gas.

“This makes a significant contribution to the nation’s hydrocarbon resources. Additionally, these assets hold reserves estimated at 2.85 billion barrels of oil, 850.85 million barrels of condensate, 11.3 trillion cubic feet of associated gas and 12.26 trillion cubic feet of Non-Associated Gas.”

According to him, the essence of the due diligence workshop is to identify a successor that has the requisite financial resources and also demonstrates the technical expertise to manage the assets throughout the life cycle.

He said: “Our goal is clear at this due diligence meeting: to identify a successor who not only possesses the requisite financial resources but also demonstrates the technical expertise to responsibly manage these assets throughout their lifecycle.”

The NUPRC boss further noted that the commission must ensure that the inherent environmental and end-of-life liabilities i.e. decommissioning liabilities, are accurately identified, and assigned to the party best equipped to bear the associated risks.

Komolafe said this necessitates a comprehensive understanding of regulatory requirements, industry best practices, and the unique challenges inherent in oil and gas operations.

Earlier, he explained that the SPDC JV assets are currently operated by the SPDC on behalf of its Joint Venture (JV) partners namely NNPCL Limited and Total Upstream Nigeria Limited, Nigeria Agip Oil Company and SPDC.

He recalled that the SPDC JV OMLs were originally awarded as Oil Exploration Licence -1(OEL-1) on 1 January 1949 covering the whole of southern Nigeria and Cameroon.

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Komolafe said ultimately, the assets were converted to OMLs on 1 April 1962 and subsequently renewed in 2014 and 2018 for 20 years.

He noted that to date, the assets have achieved a cumulative production of 5.35 billion barrels of crude oil, 165. 57 million barrels of condensate, 9.51 trillion cubic feet of Associated Gas and 3.75 trillion cubic feet of non-associated Gas, contributing immensely to the achievement of Nigeria’s crude and condensate output.”

He however emphasised that the NUPRC is committed to a free entry, free exit business principle aimed at encouraging investors in the sector.

Komolafe noted that NUPRC understands the importance of providing a stable regulatory framework that installs confidence and encourages investment.

He added: “To this end, we have implemented robust measures to streamline regulatory procedures and eliminate unnecessary barriers to investment.

 “Accordingly, The Commission has developed a Divestment Framework consisting of seven cardinal pillars to guide the assessment of applications for Ministerial consent to the SPDC Divestment and other similar divestments. These pillars include a. Technical Capacity: The successor entity must demonstrate proven and verifiable capacity to operate the asset vigorously and in a business-like manner.

“b. Financial: The Commission shall assess the prospective successor entity’s balance sheet and financial viability and verify readiness to undertake a defined work programme and fulfil required obligations on the assets.

“c. Legal: The acquiring entity must in line with the interest of the nation be ‘fit and proper’ persons in the eyes of the law. Clear evidence of the resolutions of legacy debts and legal encumbrances must be established and appropriate mechanisms to manage residuals agreed upon.”

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Tuesday, March 26, disclosed a schedule of 29,823,067 barrels of crude oil supply to domestic refineries between December 2023 and April 2024.

The Chief Executive Officer of NUPRC, Gbenga Komolafe disclosed this in his presentation at the meeting with the Oil Producers Trade Session (OPTS) and Independent Petroleum Producers Association (IPPA) with the Crude Oil Refineries Owners Association of Nigeria (CORAN) in Abuja.

The document was titled: “Implementation of PIA Directives on DCSO.”

He said 14,067,053 being “65% of crude oil supplied to local refineries came from NNPC.”

According to him, only 15% of the domestic sales/suppliers came from other oil producers’ partners/ their equity partners.

Komolafe also revealed that other producers supplied 3,953,170 as other oil traders supplied 4,388,057.

The NUPRC boss, who also dropped the hint, also noted that 6,914,784 was supplied from the West Texas Intermediate (WTI).

He assigned the committee on Domestic Crude Oil Obligation Implementation to generate a template for implementation of the Domestic Crude Oil Obligation.

Section 109 (2) of the Petroleum Industry Act (PIA) empowers the commission to enforce Domestic Crude Oil Obligation which also insists on the supply of crude oil to local refineries.

He urged the committee to present its report to him on 28th March 2024.

According to him, the essence of the meeting was to review the status in respect of the implementation of the domestic crude oil obligation.

At the meeting, while the crude oil producers lamented that the fiscal environment in which they operate in line with international best practices does not make domestic supply attractive, the refiners cried out that the producers have starved them of feedstock for operations.

Komolafe thus directed that “We have charged the committee to report back to my table by 28th of March.

“It means they have to report within 48 hours. That tells you how critical the task is. They will be coming back with this template.

“The template will tell us clearly the roles and obligations of both parties whether the refiners or the operators.”

The NUPRC boss noted that the template will make it possible to detect defaulters of the obligation.

He said, “Should there be any default there will equally be consequential remedial action.

“Default occasions huge cost. This is the issue. So that template will tell us who has defaulted and the consequence of that default.

“With that parties will be alive to their responsibilities rather than putting the nation at risk in that aspect.”

Komolafe recalled that before the passage of the PIA, the country neglected the development of its downstream and of course, became a nation with huge crude oil and a net importer of refined products.

He, however, insisted that with the spirit of the PIA, “which provided for the Domestic Crude Oil Obligation under Section 109 (2):

“Producers should satisfy their domestic supply obligations to the refineries so that with that they can reverse the trend of being a net importer of refined products and gradually energize to become a nation with vibrant downstream in a way we shall have robustness with our midstream and become a net exporter of refined crude in a manner we can add value across all the value chain in the industry.”

The CEO said the provisions of section 109 (2) of the PIA include a comprehensive examination of the challenges and complaints raised by all stakeholders involved in the allocation and offtake process.

According to him, the commission aims to identify and address these challenges effectively, with the ultimate goal of ensuring a seamless and efficient allocation process by the oil producers and offtake by the domestic refiners, in strict adherence to statutory requirements and operational best practices.

Komolafe said while it is natural to encounter challenges, particularly during the initial stages of implementing

Domestic Crude Oil Supply Obligation (DCSO), he assured the stakeholders that the Commission is closely monitoring all developments to safeguard against any adverse impacts on national production and to prevent any violations of the DCSO provisions.

He said: “The complaints received so far from within Commission, oil producers and Dangote refinery that are of concern to the Commission include: a.Inability to factor in the provisions of the law while executing contractual agreements. This has resulted in some companies being reluctant to allocate a portion of their production to Domestic Refineries

“Change in vessel nomination under 24 hours to laycan. c.Inability to provide the required financial instrument/backing prior to loading. “d. Delay in Expected Time of Arrival of vessels resulting in production cut which is inimical to our national budgetary targets.

“e. Frequent Change in laycans for crude oil allocated to domestic refineries. Delays at loading terminals after the arrival of the loading Vessel.

“Although a Committee has been set up with representatives from the Commission, NMDPRA, NNPCL, OPTS, IPPG and Dangote Petroleum Refinery, to come up with a framework that will ensure hitch-free implementation of the DCSO provisions, it is necessary for me to also discuss with the Chief Executives since the buck stops on your desk.”

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Meanwhile, CORAN chairman, Momoh Oyarekhua noted that “some of us have been in engagement with the producers in the last three years and we have not received a barrel of crude. We have been going back and forth and we have submitted all the documentation we were asked. A barrel of oil we have not received.”

He also said since refined products are sold in naira, they should have the leverage to buy the crude oil in the local currency.

The chairman said the most important issue is for the refiners to be guaranteed crude supply.

He denied that despite the commission had facilitated his company: OPAC Refinery to secure crude oil 10,000 barrels of crude oil it has only received 1,500 barrels at the beginning of the first quarter of 2022.

He said that the frustration over the lack of crude has taken the local refiners back.