But recent reports of the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, indicated that oil output, including Condensate, has been hovering between 1.4 million bpd and 1.5 million bpd in the past few months for some reasons, especially inadequate funding and oil theft.
However, key industry operators believe that Nigeria could ramp up oil production to 2.5 million bpd within the next 12 to 18 months, if conscious steps are taken to conclude some deals, especially the sale ExxonMobil’s 40 per cent stake in Mobil Producing Nigeria Unlimited, MPNU’s assets to Seplat Energy Plc, which started in 2022.
But there are indications that the NUPRC, the regulator of Nigeria’s upstream oil sector, have not been responsible for the alleged delay in granting consent.
NATIONAL ECONOMY, recalls that while speaking at the Africa Oil Week, AOW, in Cape Town, South Africa, last October, Commission Chief Executive, Gbenga Komolafe, who had expected the deal to be concluded earlier, said, “We are very optimistic that parties to the transaction will go back, look at the position of the regulator and come back by abiding by the provisions of Nigerian laws and the right thing will be done.”
Also, in his comments obtained by NATIONAL ECONOMY, a lawyer and Energy Analyst, who is familiar with the issue, said: “When ExxonMobil came up with the idea of divesting in favour of Seplat Energy Plc, the NUPRC did not decline. It only insisted that the process stipulated in Section 14 of the 2019 Joint Operating Agreement, JOA, be followed.
“The JOA, which governs the Joint Venture operations between the NNPC Ltd and ExxonMobil, clearly stated that the Co-Venturers reach an agreement among themselves as a condition for getting NUPRC’s consent.
“In line with the law, the commission had advised ExxonMobil to comply because it has a marriage-like kind of relationship with NNPC Ltd, which cannot be dissolved without the agreement of the two parties.
“So, the Co-Venturers have to get back to the regulator to speak with one voice that they have agreed to sell the assets to Seplat Energy. This is the first step. There are also other steps, which are usually referred to as the seven pillars, including the making of financial commitment to the environmental restoration of producing sites.
“As a regulator, NUPRC upholds the law as contained in the Petroleum Industry Act, PIA, and guidelines on assignment of interests whatsoever, including share sales. This explains why it has already put in place a robust template to guide divestment in Nigeria’s oil and gas industry.
“It is very important that all parties should respect the sanctity of law and JOA between co-venturers in the deal. At the moment, the co-venturers are still in the process of resolving their commercial issues and respect for the sanctity of JOA.
“When the parties have reached an agreement and get back to the commission, I am optimistic that the NUPRC will hold a workshop to review their submission and grant consent. NUPRC has intuitively put in place arrangements to make it easier for investors to close deals.
“I am also optimistic that the Commission will grant what is often referred to as Subject-to-Clearance Consent within 30 days, provided the co-venturers demonstrate a strong commitment to meeting their obligations, especially responsibilities to host communities and environmental remediation.”
On his part, the national president, Oil and Gas Service Providers Association of Nigeria, Mazi Colman Obasi, said, “The Komolafe-led team at the NUPRC has done so much to enable businesses in the industry. For instance, NUPRC developed regulations, giving meaning and intent to the PIA, to ensure that all bottlenecks associated with regulatory processes are eliminated or minimised, to entrench seamless upstream petroleum operations.
“The gazetted regulations include Petroleum Licensing Round Regulations 2022, Petroleum Royalty Regulations 2022, Conversion and Renewal (Licences and Lease), Nigeria Upstream Petroleum Host Communities Development Regulations 2022, Domestic Gas Delivery Obligations Regulations 2022, Nigeria Upstream Petroleum Measurement Regulations 2023, Production Curtailment and Domestic Crude supply Obligation Regulations, 2023, Frontier Basins Exploration Fund Administration Regulations, 2023, Nigeria Upstream Decommissioning and Abandonment Regulations 2023, Significant Crude Oil and Gas Discovery Regulations, 2023, Gas Flaring, Venting and Methane Emission (Prevention of Waste and Pollution) Regulations, 2023 and Nigeria Upstream Petroleum Unitization Regulations, 2023.
“The 14 draft regulations awaiting gazetting include Upstream Petroleum Fees and Rent Regulations, Acreage Management Drilling and Production Regulations, Upstream Environmental Remediation Fund Regulations, Upstream Petroleum Safety Regulations, Upstream Petroleum Environmental Regulations, Upstream Petroleum Measurement Regulations, Advance Cargo Declaration Regulations, Draft Upstream Commercial Operations Regulations, Draft upstream Petroleum Code of Conduct & Compliance Regulations, Draft Upstream Petroleum Development Contract Administration Regulations, Draft Upstream Revocation of licenses and Lease Regulations, Draft Upstream Petroleum Assignment of Interest Regulations, Draft Nigerian upstream Petroleum (Administrative Harmonisation) Regulations and Draft Amendment to the Nigerian Upstream Petroleum Host Communities Development Regulations 2022.
“The NUPRC has held many stakeholder engagements on the commission’s Draft Regulatory Framework for Energy Transition, Decarbonisation and Carbon Monetisation and incorporated the inputs arising from the engagements into the regulatory framework, which will not only govern the activities of the newly established Energy Transition and Carbon Monetisation Division of the Commission but those of the entire industry in considering Energy Transition in oil and gas field development.
“As a business enabler, the NUPRC has intentionally attracted many local and foreign investors to Nigeria’s oil and gas industry, thus culminating in Nigeria’s oil reserves rising to 37.50 billion barrels in 2024, from 36.966 billion barrels recorded on January 1, 2023, while natural gas rose to 209 trillion cubic feet on January 1, 2024, from 208.83TCF recorded over the corresponding period last year.
“The Commission has taken deliberate steps to drive the decade of gas programme declared by the Federal Government through more aggressive development of the nation’s huge gas resources, enhanced exploration activities, development of utilization schemes leading to gas reserves growth, increased gas production, maturation of domestic and export gas markets, in addition to gas flare elimination and commercialisation through the Nigeria Gas Flare Commercialization Programme (NGFCP).
“NUPRC has completed the 2020 Marginal Field Bid Round and issued Model Licences and Petroleum Prospecting Licenses to deserving awardees leading to an early Field Development Plan, FDP, and production from the awarded Marginal Fields in line with the provisions of the PIA 2021.
“The Komolafe-led NUPRC has assisted several companies/fields in the attainment of the first oil production within the period under review. Some of the fields include the Anyala field (First E&P), Ikike (Total), Efe field (Newcross), Utapate, (NEPL), and Akubo Field (SEEPCo).”
Obasi stated, “It should also be noted that under Engr, Komolafe’s proactive leadership, the NUPRC, has completed plans for the holding of the licensing round in 2024 in line with Section 73 of the nation’s PIA, a development that further illustrates its commitment to enabling businesses in Nigeria’s petroleum industry. Indeed, NUPRC deserves all the cooperation and encouragement it can get to conclude the ExxonMobil/Seplat Energy deal in a very responsible and transparent manner as well as in the best interest of all parties, including the Federal Republic of Nigeria.”
