Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), spoke exclusively
to Africa Oil+ Gas Report’s Toyin Akinosho, on a range of issues, focused on increasing the country’s hydrocarbon output.
Excerpts from the conversation…
AOGR: The NUPRC has been reported as holding new licence awardees by the hand and brokering relationships between them and financiers and suppliers and offtakers. That’s a unique engagement in the annals of the industry. How is that coming?
Commission CE: The NUPRC is putting the government’s reputation on the line in asking banks and service providers to support marginal field operators, hence the regulator wants to ensure that the companies involved in the engagements have their corporate governance framework in place before it introduces them to third parties. .Awardees Will Be Helped to Meld their Corporate Governance Framework.
The commission has midwifed the unity of the multiple awardees in each SPV, and encouraged the pulling together of funds. We brought them together through Petroleum Prospecting Licence (PPL) but development fund needs to be sourced jointly. Otherwise, weak ones will need to go into carry agreement voluntarily,
If funders don’t see a United front; they will be less compelled to engage he That’s why the commission developed a corporate governance framework for upstream petroleum operations currently at an advanced stage of internal review and stakeholder engagements required for its finalization.
You addressed this issue online at Schlumberger’s 70th Anniversary ….
I took the opportunity of my online address to Schlumberger’s 70th Year Anniversary Parley in Nigeria to ask the company to get on board and participate in services for newly awarded marginal fields. I was asking them to get involved in some sort of pre-export financing. As service providers, they get settled through the crude proceeds.
Schlumberger responded that they don’t do two things: 1) They don’t take equity for services (2) they don’t do commodity. I told them I appreciated the feedback and believe there is room for partnership.
Now, if they (Schlumberger) are not in the business of commodity, who is. We’d talk to Vitol, we’d talk to Trafigura. We’d get everyone around to the table. I worked with commodity traders at the time I headed the NNPC’s Crude Marketing Unit, we bring our legal background, our commercial background to the table. The lesson here is that a regulator must be multi-disciplinary.
Mini Deepwater Bid Round Terminal Date -34 companies, including four oil majors, are prequalified for the ongoing bid round for seven deepwater acreages. The bid round was inaugurated in January 2023 and the final awards were expected to be announced latest by end of April 2023…
That terminal date is no longer cast in stone: We work with feedbacks and we are on an ongoing conversation with stakeholders. The Bid round was not timed to end before the exit date of the outgoing administration. There is no transition in the PIA. What the PIA says is that there should be bid rounds. If we get to a point today that we are sure that everything is going smoothly with the awardees of the last bid round, we will put out notice for another round and open the market. Let me repeat this for emphasis: We are not doing this bid round around the political transition.
There are industrywide misgivings about several operators (especially Nigerian independents) not sweating their assets and as such contributing to dwindling output
The commission will take operatorship of E&P assets seriously as it determines addition or subtraction to the output of hydrocarbons. We will ask companies to upload their financials on dedicated portals for economic regulation. We will discourage keeping assets stranded in our regulatory focus to optimize oil and gas production through enforcement of the drill or drop provisions of the PIA. Let us know your CAPEX on E&P projects. The PIA allows the regulator to make such an instruction. It enables the commission to measure a company’s financial viability. We want to know what Companies have committed to their assets as CAPEX.
Editor’s note: President Muhammadu Buhari approved the amendment of Deep Offshore Oil block Bid Round calendar after this interview had taken place. The president made the approval in his capacity as the Petroleum Resources Minister.
The NUPRC explained, in a statement, that the move was to accommodate the concerns expressed by both local and international investors over the closeness of the schedule to the terminal date of the present administration in the country.
The deadline for the submission of Technical/Commercial bids was extended to May 19, 2023. The timeline for concluding activities of contract negotiations and signing is now between July 3 and 28, 2023. The outstanding activities for the conclusion of the exercise include the Technical/Commercial Bid Submission and the Ministerial Consent/Contract Negotiation and Signing. The technical/commercial bid submission involves data access, purchase, evaluation, bid preparation and submission; bid evaluation and publication of results as well as commercial bid conference and announcement of winners,” he added.
The NUPRC statement reiterated that the commission was fully committed to conducting the bid round in a manner that guarantees the achievement of the objectives of the exercise, pointing out that participation is both robust and beneficial to key stakeholders.
