By Foluso Ogunsan, Upstream correspondent, West Africa
The Nigerian independent, Heirs Energies, has signed agreements with five companies for offtake of natural gas in Agbada and Elelenwa fields, located in the company’s operated Oil Mining Lease (OML) 17, onshore Eastern Nigeria.
The volume of offtake is around 18Million standard cubic feet per day (18MMscf/d). OML 17 is operated by Heirs on behalf of the NNPC/Heirs Energies Joint Venture.
Two of the offtakers: AUT Energy and Twems Energies, both involved in CNG development, are taking gas under the auspices of the Nigerian Gas Flare Commercialisation Programme (NGFCP), a programme initiated and superintended by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). They were awarded “Permits to Access Flare Gas Issuance” an instrument which conferred on them the rights to approach Heirs to offtake gas.
The three other companies are offtaking the gas as willing buyer-willing seller customers of Heirs Energies/NNPC JV, outside the NUPRC NGFCP framework. They include PCC Development Limited, a company with strong Chinese backing; Africa Gas and Transportation Company (AfricaGTC) and Gas and Power Infrastructure Development Company. These companies are involved in power generation, LNG and CNG, Computing and industrial conversion of gas to multiple products such as methanol-to-olefins (MTO) used in petrochemicals- Urea, Propylene, Ethylene and plastics, as well as modular refining.
Heirs says it expects the three companies to have commissioned the plants to offtake the gas from its facilities by the third quarter of 2026.
The signing ceremony was a symbolic one as terms of agreement had been reached in the month of August. The Nigerian Gas Flare Commercialisation Programme (NGFCP) kick-started under the then Department of Petroleum Resources (DPR) in 2016 was aimed at providing a commercial framework for third-party investors to capture and commercialise associated gas otherwise b flared by an operator with no apparent case to monetise it.
HEIRS ENERGIES explains the contractual frameworks agreements with these two different sets of offtakers:.
For variability in flare volumes (Force majeure, reduced flaring or improved gas utilisation) the contractual agreement recognises the non-static nature of the flare volumes hence the executed contractual framework addresses such situations without redress for a new contract.
The role of the regulator NUPRC remains central throughout the life of the projects executed AUT Energy and Twems Energies . Any material changes to flare availability, utilisation plans or execution timelines are managed in alignment with NUPRC oversight, as attested to by Mr Ojo Olalekan Ezekiel, Senior Manager NUPRC who stated “For the Nigerian Gas Flare Commercialisation Programme (NGFCP), , Yes! We will be involved. For the other one, no. To play the commercial function- No”.
Regarding the three offtakers who are not under the NGFCP remit: Commercial mechanisms (willing buyer-willing seller, take-or-pay) these mechanisms are catered for appropriately in the contract with appropriate securities. However where payment constraints exists beyond the offtaker’s control, it can be verified under the terms in the force majeure provision and managed accordingly in line with the terms of agreement.
Offtaker Constraints and force majeure– Where offtakers are unable to take gas due to verifiable force majeure or external constraints, established contractual remedies apply. The focus of the NGFCP is not a punitive measure but practical execution ensuring optimal utilisation of natural resources while adhering to safety, environmental, regulatory compliance and economic viability.
Sourcing gas from third parties- Flare-gas agreements under the NGFCP and Non-NGFCP frameworks are site-specific. Sourcing flare-gas from other upstream producers would fall outside the scope of these agreements and would require separate commercial and regulatory frameworks.
Pricing of flare-gas in the NGFCP is governed by regulatory and commercial principles approved by the NUPRC and are contractually confidential agreements. They are however structured to incentivise investments in flare-gas utilisation by third-party offtakers. These financially-incentivised contractual agreements are further buttressed by the NUPRC stance as explained by its representative Mr E.O Ojo “We’re interested in everything. Our interest, our primary core is for you to reduce flaring. That is the main thing. Every other thing is secondary. The main thing is we want to eliminate routine flaring, reduce emission. That is primary. All the other things that come with it are addition. It provides opportunity for us to create value from what is being wasted, opportunity to create more jobs, opportunity to generate energy, opportunity to provide alternative fuel. A lot of opportunity and we’ll drive it, we’ll ensure that we stream as much value as we can from it. Having said that, the primary core objective first is to stop routine flaring”.
Apart from Heirs Energies, companies in JV partnership with NNPC who are on the NGFCP and Non-NGFCP programmes include Renaissance Africa, Chevron Nigeria Limited (CNL) and Seplat Energies , according to Seyi Omotowa, Chief Upstream Investment Officer of the NNPC Upstream Investment Management Services (NUIMS). Twenty companies have signed up to offtake gas from these operators .Heirs Energies, it would appear, has led the way.
