Engr. Gbenga Komolafe, Commission Chief Executive, NUPRC
-Felix Douglas
…Commission charting a new course in the upstream petroleum sector through 10-year strategic plan, forward-thinking, technically and commercially viable priority regulations developed to support energy security.
…NUPRC working assiduously to ensure PIA is effectively implemented for growth in oil and gas reserves and achieving national average daily production target set at 2.5 million barrels of oil.
“Reflecting on topics like this is essential in staying abreast of the developments and challenges in the oil and gas industry, particularly regarding regulatory frameworks and investment strategies.”
“As a Regulator, we have continued to pivot the upstream oil and gas in innovative and collaborative manner with industry stakeholders to attract investments to the sector and power industrial development, ensure energy security, affordability and sustainability in Nigeria.”
These were the words of Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Chief Executive (CE), Engr. Gbenga Komolafe, in his keynote speech at the 7th edition of Nigeria International Energy Summit (NIES), held in Abuja.
According to Engr. Komolafe, unfortunately, in the years preceding the enactment of the Petroleum Industry Act (2021), investments in the Nigerian oil and gas industry declined mostly due to regulatory uncertainty and global call for more renewable energy investments driven primarily by growing concerns over climate change. “At the recently concluded COP28 Summit, the world leaders declared their intent to work collaboratively and expeditiously to triple the world’s installed renewable energy generation capacity to at least 11,000 GW by 2030.”
He said the IEA World Energy Outlook 2023 indicates that investment in clean energy technologies is already significantly outpacing spending on fossil fuel. There is also increasing competition from regional peers which has resulted in reduction in Nigeria’s share of Capital/Reserve ratio.
However, the Commission is charting a new course in the Upstream Petroleum Sector through its 10-year Strategic Plan (2023-2033) unveiled in May 2023 as well as the twenty-five (25) forward-thinking technically and commercially viable priority regulations developed in collaboration with industry stakeholders to support energy security and ensure that all bottlenecks associated with regulatory processes are eliminated pursuant to Section 263 of the PIA.
In order to further entrench collaborations with the industry, the Commission has established a dedicated contact team who liaises periodically with industry stakeholders on matters related to regulations and guidelines.
“We have also facilitated collaboration amongst awardees, service providers, OEMs, investors, financiers and awardees through platforms such as the Sub-Saharan Africa International Petroleum Exhibition and Conference (SAIPEC), roadshows.”
Potentials
Engr. Komolafe pointed out that the Commission has been working assiduously to ensure that the PIA is effectively implemented for growth in oil and gas reserves as well as achieving the national average daily production target set at 2.5 million barrels of oil and condensate per day in the near term. The oil and gas reserves in Nigeria represents 30% and 34% of the African oil and gas reserves respectively. “Our vast reserves hold immense potential for sustainable development and prosperity.”
Although the actual national production currently averages 1.33 Million barrels of oil per day and 256 thousand barrels of condensate per day, the national technical production potential currently stands at 2.26 Million bpd while the current OPEC quota is 1.5 Million bopd. Closing the gap between the actual oil production and the technical potential presents a significant opportunity for Nigeria to unlock additional revenue streams, address the current foreign exchange gap and strengthen her economic resilience.
Aside from hydrocarbon resources, Nigeria is blessed with potentials for green and blue hydrogen, solar, wind, biomass and critical minerals for development of clean energy technologies as well as growing population predominated by young people. With a coastline along the Gulf of Guinea, market size of more than 200 million people projected to reach between 390 million and 440 million people in 2050, Nigeria represents hope for Africa. Interestingly, about 70% of the Nigerian population are under 30, and 42% are under the age of 15 representing a huge economic asset. Indeed, Nigeria’s potentials are derived from its human, natural and material resources which must be mobilised to propel her on a path of economic growth and development and for her sustainable energy future.
As a country, Nigeria is also on track to meet its environmental stewardship obligations. Analysis of EU’s EDGAR database shows that Nigeria occupies a distant 165th position in the global ranking of top emitters, with a GHG emissions per capita at 1.88 tonnes CO2 equivalent per capita per year, representing just 0.13% of the global total.
Initiatives:
Given the disparity between the average daily production and the national production potential, Engr. Komolafe added that the Commission is taking strategic measures to arrest some challenges confronting the country in order to boost production. These initiatives include:
Measures to improve transparency in hydrocarbon measurement and accounting, including technical integrity audit of the existing metering facilities with the intent to get the meters working at industry acceptable limits for enhanced hydrocarbon accounting as against the old practice of production reporting.
Collaborative work programme administration with the E & P companies, and close monitoring to ensure that they meet their work programme obligations.
Monitoring of the financial viability of the E & P companies.
Acceleration of field developments (FDPs) through timely approvals and ensuring speedy execution.
Production optimisation through periodic testing of the wells to ensure production at optimal rates.
Identifying candidate wells for workover and interventions.
Adoption of Enhanced Oil Recovery processes and technologies, reducing cost and vacating entry barriers such as front-loaded entry fees considering increasing competition from regional and global peers.
The Commission Chief Executive disclosed that it is working tirelessly to reposition Nigeria as a prime investment destination in the oil and gas sector.
Through its strategic initiatives and collaborative efforts with industry stakeholders, the Commission has demonstrated great commitment in creating an enabling environment that attract investments in line with national goals and aspirations.
Success Story
Engr. Komolafe explained further that efforts of the Commission, are already yielding good results evident in the level of upstream activities in the past year including:
A total of 51 Field Development Plans approved in the year 2022 -2023 expected to attract a total USD17.64bn investment inflow as well as deliver cumulative oil recovery and gas recovery estimated at 2.12 billion barrels and 13.13 trillion cubic feet respectively in the coming years.
A total of circa USD2.5 billion investment in 175 wells drilling in the year 2022 – 2023.
A total of USD2.68 billion investment in 842 well workovers and other well intervention activities in the year 2022 – 2023 resulting in increased average oil production.
Improved exploration CAPEX through seismic acquisition, seismic processing and reprocessing as well as exploratory drilling.
Growth in rig count from just eight (8) in 2021 to average of thirty (30) in the past one year.
Early first oil achieved in recently streamed fields through accelerated FDPs. Some of the fields include: Ikike (Total), Efe field (Newcross), Utapate, (NEPL), Akubo Field (SEEPCo), Oyo (General Hydrocarbon) and several others streamed under Extended Well Tests including Ethiope, Omefejo, Ofa, Olure, Ibom, Apani, Kalaekule.
The Commission has also intensified efforts in collaborating with International Oil Companies (IOCs) to ensure accelerated maturation and development of some high volume deep offshore assets.
Despite the low emissions attributed to Nigeria compared to the global total, “we are not resting on our oars. The Commission is effectively spearheading the national drive to achieve zero-flare target by 2030 and net zero carbon emissions by 2060 through several initiatives including a unique flare commercialisation programme – the NGFCP.”
As part of the its efforts to encourage collaboration, the Commission established a College of Awardees, following the award of 49 NGFCP flare sites, to serve as a forum for the successful entities to leverage their collective experiences as well as connecting them to other stakeholders and critical support systems, bringing together world-class service providers, including technology providers/original equipment manufacturers (OEMs), financiers and funding entities, and multilateral agencies to foster optimal delivery of the flare commercialisation projects.”
Engr. Komolafe stated further that the Commission has also made significant strides in the realm of innovation. Over the past 3 years, it has embarked on a transformative journey, moving from manual processes to embracing technology and digitalization across all departments allowing it to leverage data analytics and artificial intelligence to unlock new efficiencies, make informed decisions.
This innovation has assisted the Commission to eliminate delays and enhance productivity, transparency and accountability as well as enhance the monitoring of compliance with regulatory requirements.
Embracing of innovation has fostered a culture of technology adaptation and adoption across the upstream oil and gas industry. Hence, the oil and gas companies in Nigeria are increasingly committed to pushing the boundaries of innovation as they continue to invest in cutting-edge technologies from data analytics and automation to remote monitoring and predictive maintenance.
The Commission Chief Executive reassures willing investors that implementation of the Host Communities Development Trust (HCDT) provisions of the PIA has restored confidence and created social inclusion for the host communities by the operators. “In this regard, the Commission, in carrying out its oversight roles, has registered a total of One Hundred and Three (103) HCDTs, and has deployed an intelligent digital, platform for reporting, monitoring, and ensuring transparent administration of the HCDTs for sustainable operations in the Nigerian communities.”
Other Investment Opportunities and Gas Production
The Commission’s proactive initiatives and drive in promoting investment have indeed opened a myriad of opportunities for investors in the oil and gas sector. One good example is the efforts in attracting investors to boost investment in gas and support the Federal Government’s Decade of Gas Programme. At the heart of this programme is the vision to ensure that gas plays a key role to lift the nation from the challenges that confront her in order to drive sustainable development.
Recent study by the Commission revealed that growth in gas demand outstrips supply. Between 2020 and 2030, demand is expected to grow exponentially at a compound annual growth rate of 16.6% p.a.
Engr. Komolafe said natural gas production is projected to increase from 8.0 bcfd in 2020 to 12.2 bcfd in 2030 driven by major projects such as NLNG Train 7 & Train 8, Nigeria/Morocco pipeline, Ajaokuta-Kaduna-Kano (AKK) Natural Gas Pipeline Project, and so many other gas projects.
Thus, the Commission is proactively pivoting the industry to close the projected supply gap by taking deliberate steps to drive the Decade of Gas Programme through a 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 Program (NGFCP).
“The import of this is to showcase the huge opportunities in gas business for both the existing investors and new entrants in the Nigerian upstream gas sector.”
The Commission has created further investment opportunities through the ongoing licensing round for seven deepwater acreages as well as the proposed 2024 closed bids expected to increase the nation’s reserve and production and boost national revenue, he added.
Engr. Komolafe attested to fact that huge opportunities also exist in Seismic acquisition on multiclient basis, development of deeper hydrocarbon opportunities, drilling and well services in both green and several mature fields, waste management. There are also business prospects in decarbonisation and carbon-pricing system currently being stewarded by the Commission. Each of these areas provides a unique entry point for willing investors.
Looking Ahead and Moving Forward
The Commission Chief said NUPRC will undertake regulatory activities, and implement strategic initiatives articulated in the NUPRC Regulatory Action Plan (RAP) for 2024 and the near term to enhance the global competitiveness of the Nigerian upstream sector, attract investment, and optimise hydrocarbon resource development for the benefit of the Nigerian economy and shared prosperity.
He re-echoed the words of President Bola Ahmed Tinubu: that “Nigeria has never been more ready for business than it is now”. Nigeria is a nation where needs meet opportunities.
“We reassure you of our commitment to sustaining our ongoing efforts in ensuring optimal development of Nigeria’s petroleum resources. In the words of Simon Mainwaring, “Effectively, Change is almost impossible without industry-wide collaboration, cooperation, and consensus”. We will continue to collaborate with the industry operators and other stakeholders to ensure good asset stewardship and resource optimisation for enhanced energy security and economic prosperity as well as more sustainable and resilient energy future.”
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