The granting of a Petroleum Exploration Licence (PEL) to TGS-PetroData Offshore Services Limited (TGS-PD), by the Nigerian Upstream Petroleum Commission (NUPRC), marks a major milestone in efforts to boost Nigeria’s oil production.
The license is in compliance with the provisions of Section 71 (1) – (10) of the Petroleum Industry Act (PIA).
The PEL, it said, is the first under the Petroleum Industry Act, PIA 2021 and is under the licence agreement which the commission and TGS-PD executed for a Geophysical Survey Project for the acquisition of about 56,000 square kilometres of 3D seismic and gravity data.
Chief executive of the NUPRC, Gbenga Komolafe, said the development was another milestone in the smooth implementation of the PIA for the attraction of investment in the oil and gas sector in Nigeria.
Without data, the NUPRC said reserves cannot be auctioned for development and revenue attraction.
“Data acquired under the PEL is not proprietary but speculative/multi-client survey data acquired in partnership with the NUPRC. The licence therefore authorises TGS-PetroData Offshore to carry out non-exclusive Petroleum Exploration Operations on a multi-client basis within the licensed area and permits the use of the acquired 3D seismic and gravity data by exploration companies.
“Due to the specialised nature of the Geophysical Survey Vessel to be used for the acquisition of the 3D seismic and gravity data, the Nigerian Content Development and Monitoring Board (NCDMB) granted no objection to TGS-PD to deploy the facility.
“The acquisition of the 3D seismic and gravity data commenced on July 17, 2023, and the processed data will be available for use by mid-2024,” the commission said.
The scope of the Geophysical Survey Project, it stressed includes: Phase 1 acquisition of about 11,900 sq. km of new 3D seismic and gravity data in water depth ranging from 30m to 4000m offshore Niger Delta.
According to the NUPRC, acquiring seismic and gravity data at the same time will improve the correlation of identified structures and reservoirs.
It added that the scope also includes a record length of 14 seconds, which is the first of its kind in Nigeria and will help image deeper reservoirs that have not been done offshore Niger Delta before now.
“The acquired seismic and gravity data will be processed using the latest TGS proprietary technology. The acquired data will be licensed to exploration companies.
The Commission listed one of the benefits that Nigeria will derive from the new 3D seismic and gravity data acquisition as: availability of new regional 3D seismic and gravity data in deep waters ranging from 30m to 4000m offshore Niger Delta.
“The Commission has the sole right and title over the acquired raw and interpreted data to be obtained by the licensee (TGS-PD) under a petroleum exploration licence. Therefore, the 3D seismic and gravity data belongs to the Nigerian Government.
“Based on section 71(7) of the PIA, the commission and federal government shall benefit from the revenue that will be generated from the data use licence that will be granted to interested exploration companies by TGS-PD.
“The new 3D seismic and gravity data being acquired will further provide an opportunity for understanding the regional petroleum system of the ultra-deep waters of Nigeria and unlock the hydrocarbon prospectivity of Nigeria’s frontier basins (Ultra-deep offshore),” it stressed.
According to the NUPRC, the 3D seismic and gravity data when acquired will be useful in future deep water licensing rounds which will attract Foreign Direct Investments (FDIs) into oil and gas exploration in Nigeria as well as create opportunities for increasing oil and gas reserves and production.
Bolstered by ongoing efforts in that direction, the Minister of State, Petroleum Resources, Mr Heineken Lokpobiri expressed optimism that Nigeria will ramp up crude oil production (and condensate) from the current 1.7 million barrels per day (mbpd) to 2 mbpd by this December.
Lokpobiri, emphasised that his sole agenda as a minister in President Tinubu’s cabinet was to ensure crude oil production, being the backbone of the Nigerian economy, remained on a steady climb.
He said festering insecurity in the Niger Delta region has been the greatest obstacle standing against improved oil production, but assured that deepened stakeholder engagement was gradually tackling that challenge.
In addition to this the recent memorandum of understanding (MoU) signed by the Nigerian National Petroleum Company Limited (NNPCL) and the Nigerian Content Development and Monitoring Board (NCDMB) with international oil companies will enhance crude oil production is set to make additional impact in oil production.
The main goal of the tripartite agreement is to drastically reduce contracting cycle in the sector to an optimal level of not more than six months.
Additionally, this will improve the ease of doing business, reduce cost and drive efficiency, which will translate to production growth, increased revenue and enhanced profit.
Besides, the MoU is expected to contribute significantly to the double-digit economic growth rate agenda of the federal government and generate value for investors, oil companies and host communities.
Beyond this, the management of NNPCL has unveiled other key benefits of the agreement, which, it said, would make open and selective tender contracts competitive and scale down sourcing tender to 180, 178 and 128 working days, respectively.
This is in contrast with the current best effort performance of 327,333 and 185 working days.
It is hoped that the MoU will mark a new beginning for the oil and gas industry, if the three parties in the deal exhibit sincerity of purpose, accountability and transparency in the implementation of the agreement.
It is projected that a better future in optimal crude oil production will be the ultimate goal, to the benefit of all concerned. It is heartwarming that the collaboration is coming at a time when the oil and gas industry is passing through multiple challenges. The MoU could prove to be a defining moment in the sector.
Before the Mou was signed, the previous ones with international oil companies (IOCs) were not closely monitored.
This led to low level of compliance on the agreements and so the MoU should reflect the present economic realities.
The oil communities should be treated as major stakeholders in oil production business. Incidentally, the tripartite agreement came on the heels of the threat by the Ijaw Youth Council to shutdown oil production in the Niger Delta region following retirement of some of their indigenes in the NNPCL. They alleged that the retirement was ill-advised and ill-motivated.
It is also expected that government should tighten all loose ends that may hamper oil production as it is important to ascertain the volume of crude oil produced at any given time to ensure transparency and accountability in the sector. The deployment of technology will ensure effective monitoring of crude production for export and will also reduce the current delays in granting of agency permits that often result in high cost of drilling.
Experts have also said that security challenges, including crude oil theft, bunkering, kidnapping and piracy on the high seas, should be addressed.
Statistically, Nigeria loses about 400,000 barrels of crude oil daily to oil theft. Also, Nigeria lost about $46 billion, or N16.25 trillion, to crude oil theft in 11 years. Unfortunately, the federal government has not mustered the political will to stop oil theft.
Sadly, it has also not been forthcoming with concrete efforts to end gas flaring despite setting up some deadlines.
Stakeholders have also called for concerted effort this time around to drastically reduce gas flaring. Apart from loss of huge revenue, the consequences of gas flaring in the oil-bearing communities of the Niger Delta region are enormous. Currently, Nigeria is ranked the second biggest gas flaring country in the world. Nigeria lost over N2 trillion to gas flaring in the last decade, while IOCs in the country produce over 2.524 of scf yearly.
There is no doubt that a seamless implementation of the MoU will bring about development, create jobs and ensure peace and stability in the country. It will encourage foreign investments. The oil and gas sector must be made to be competitive in line with global standards. Nigeria is currently rated as one of the countries with the highest crude oil production costs in the world. The ugly narrative needs to change.
With the establishment of the National Production Monitoring System (NPMS), crude oil production can be adequately monitored. The crude oil production data can be easily known. With the Petroleum Industry Act in place, it is hoped that the signed MoU will enhance reduction in oil production costs and drive efficiency and growth in the sector.
Nigeria, through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is now considering seven regulations that would aid the implementation of some fragments of the Petroleum Industry Act, especially contracts, commercials, revocation of oil and gas licenses.
Chief executive of NUPRC, Gbenga Komolafe, said the seven regulations include; Draft Upstream Commercial Operations Regulations; Draft Upstream Petroleum Code of Conduct & Compliance.
Regulations; Draft Upstream Petroleum Development Contract Administration Regulations; Draft Upstream Revocation of Licences and Lease Regulations; Draft Petroleum Assignment of Interest Regulations; Draft Nigerian Upstream Petroleum (Administrative Harmonization) Regulations and Draft Amendment to the Nigerian Upstream Petroleum Host Communities Development Regulations 2022.
He disclosed that the Draft Assignment Regulations 2023 would elevate the provisions of the existing guidelines on divestment of interest to a regulation and by so doing, improve the rules to reflect current realities.
Komolafe said: “This phase in our regulations development is by no means a final or exhaustive one in our drive to support the upstream industry operators. The Commission will continue to embark on programmes and policies that will create an enabling environment for growth and more investments in the Nigerian upstream oil and gas sector. Therefore, we look forward to more engagements with key stakeholders like your good selves.”
Represented by the Commission’s Executive Commissioners in charge of Economic Regulation and Strategic Planning, Dr. Kelechi Ofoegbu, Komolafe said Draft Nigerian Upstream Petroleum (Administrative Harmonization) Regulations 2023 would provide regulatory clarity on the implementation of the dual regulatory regime in the upstream occasioned by the preservation of licenses and leases granted under the Petroleum Act and not converted under the PIA.
Komolafe said the amendment to the host community regulation would introduce certain amendments to the existing regulation on the implementation of the host community regime to further ease the administrative process and provide regulatory clarity to the challenges that the implementation of the regime has thrown up in the last one year since the initial regulation was established.
According to him, the Draft Upstream Commercial Operations Regulations 2023 is aiming at establishing the framework on the procedure and process for evaluation and approval of Field Development Plans and yearly work programme and budget approvals.
The contract regulation on the other hand, is expected to prescribe the framework for the regulatory administration of petroleum development contracts (Joint Development Agreements, Production Sharing Agreements, Service Agreements) relating to upstream petroleum operations.
Komolafe said the Draft Upstream Revocation of Licences and Lease Regulations set out the framework for implementing the Revocation Provisions of the Act and for dealing with post revocation issues in a systematic manner that ensures.
The NUPRC head said the draft regulation proposes to establish the framework on the procedure and process for evaluation and approval of Field Development Plans and yearly work programme and budget approvals.
