At NUPRC, Komolafe sees due process as way of life –

At NUPRC, Komolafe sees due process as way of life – The Sun Nigeria

By Merit Ibe

In 2021 when President Muhammadu Buhari, inaugurated the new management of Nigerian Upstream Petroleum Regulatory Commission (NUPRC) one key priorities ahead of its management was the task of closing out on the 2020 marginal oilfield bid round in a manner that is consistent with the rules guiding approvals and issuance of licenses in the upstream sector of the nation’s oil and gas industry.

Like its forebear, NUPRC is saddled with the responsibility of regulating the technical and commercial activities of the upstream petroleum sector and to get things going the right direction.

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Its Chief Executive of NUPRC, Mr Gbenga Komolafe, was recently quoted as reemphasising the need to ensure that law and due process are followed in the award of licenses to operators.

That was even as he assured that under his leadership, no marginal field operator would be allowed to “trade” in papers issued by the organisation as the rule of law would be strictly followed in the issuance of final licences to the winners.

As an apostle of due process, Komolafe has given his word to Nigerians and all oil and gas stakeholders that under his watch, no amount of pressure would make the NUPRC award final documents without due process.

In line with the critical and significant role of the oil and gas sector in the nation’s economy, especially amidst the call for divestments in the sector, “The best and only option opened to us to maximise the benefits from fossil fuels is to improve the welfare of those who are saddled with the responsibilities of managing the sector.”

As a team player who sees career enhancement as a productivity booster, the NUPRC boss considers his staff welfare as top priority and a winning strategy.

For instance, giving reasons for approving the promotion of staff of the Commission recently, Komolafe said, “Human capital is a critical and essential element of factors of production as staff need to be happy before they can work and we had assured them of the determination of the Federal Government to look after their welfare,” He said.

“It is only when staff are happy that we can talk of improving our crude oil production quota, which is presently below what we should be producing.

“I have ensured immediate approval for promotion of 195 union staff that have been stagnated in the defunct Department of Petroleum Resources (DPR) to stave off an industrial crisis that could further harm the low daily oil production in Nigeria and worsen the nation’s federation generated oil revenue.

“So what we have done is by extension to improve the nation’s revenue by increasing crude oil production from the current level of 1.4 mbbls/d to 2.4 mbbls/d”.

Giving account of the nation’s oil reserves as NUPRC boss, shortly after his appointment last year, that  a total of sixty-one (61) operating companies submitted their 2021 annual report on reserves in line with the provisions of the PIA, 2021.

Analysis of the report indicates that Nigeria’s oil and condensate reserves status as at 1st January 2022 was 37.046 billion barrels, representing a slight increase of 0.37 percent compared to 36.910 billion barrels in January 2021.

On the other hand, Nigeria’s National Gas reserves status as of January 1, 2022 was 208.62 (trillion cubic feet) TCF, representing an increase of 1.01 percent compared to 206.53 TCF as at January1, 2021.

Meanwhile, as part of the Commission’s plan to consolidate an all-inclusive strategy to increase crude oil and gas reserves (from 37 billion barrels and 208.62 TCF) the commission said it would take further steps evaluate all factors militating against efficient and effective exploration and production operations, to identify other viable opportunities.

He said “We have therefore become more deliberate and swift in implementing strategic actions and initiatives aimed at increasing our crude oil and gas reserves and production.”

Already, the Commission has initiated a massive campaign targeted at identifying oil and gas wells producing below capacity, through, Inventorisation of shut-in wells and analysis of the inventory to map the reasons for shut-in and devise measures for quick reopening; Using well and reservoir surveillance activities in identifying poorly performing wells and workover candidates for quick intervention; Embracing and adopting new technologies and advanced recovery techniques for unlocking some identified stranded oil and gas resources.

These measures have become so critical in the face of the current conflict between Russia and Ukraine and its attendant disruption to the global gas demand-supply chain.

According to Komolafe, the crisis round the Black Sea offers the country a unique opportunity to fill the supply gap through the implementation of several natural gas developmental initiatives.

This development, coupled with the Federal Government’s declaration of 2021 – 2030 as the Decade of Gas, creates much more impetus for NUPRC under Mr Komolafe to expand and grow Nigeria’s huge gas resources through enhanced exploration, development and utilisation schemes.

For him, the whole idea is to grow Nigeria’s gas reserves, increase gas production, maturation of domestic and export gas market, as well as minimise gas flare.

He said the Commission was currently engaging all lessees on their Natural Gas Flare Elimination and Monetisation Plan to ensure compliance with Section 108 of the PIA and to boost supply to the rapidly growing gas market.

“In recognition of the global energy transition and the need to achieve cleaner sources of energy, gas is being positioned as our immediate transition fuel to lower carbon emission footprint in line with our climate change commitment” he said.

It is also encouraging investors to leverage the generous gas fiscal incentives in the PIA such as the zero hydrocarbon tax, reduced royalty rates, tax consolidation provisions amongst others, to take Final Investment Decisions on their proposed upstream projects.

He said “With a proven gas reserve base of 208.62TCF (as at 1st January 2022), we are on track to increase our reserves volumes to 220TCF in less than 10 years and 250TCF thereafter.” Nigeria produces about 8BSCF/D of gas, out of which circa 20percent is delivered to the domestic market, approximately 40 percent is exported to international markets, 30 percent is utilised for producer’s internal consumption.”

Based on the provisions of the PIA, the NUPRC has issued the annual Domestic Gas Delivery Obligation (DGDO) to all lessees, which would enable it drive gas production growth as operators are made to balance their export appetite with increasing domestic supply of gas.

Other initiatives being implemented by the Commission over the last one year to increase gas production and utilisation include the Commencement of mandatory conduct of gas well deliverability tests for all gas producers to establish operating limits.

The objective is to enable the Commission determine production potential and guides the industry towards its maximum optimum capacity.

Similarly, part of management’s considerations for achieving success include constant engagement with operators on the need to drill below the conventional oil window to target gas rich zones for production to increase the nation’s gas reserves.

H eis also aiming at steering operators with saturated reservoirs to ensure their well placements drive attains optimal exploitation of oil and gas resources.

Currently revising the Flare Gas (Prevention of Waste and Pollution) Regulations 2018 and its associated Guidelines, to incorporate methane emissions capture, to ensure the elimination of gas flaring/venting and monetization of gas resources in the country Implementation of the provisions of the PIA 2021 on Gas Flare Elimination and Monetization, as a means of unlocking more gas availability to the market. Companies are made to commit to a robust plan that eliminates gas flaring by bringing them to the market and accelerating facilities development and debottlenecking projects as a tool to incentivise gas production projects from the upstream sector to meet midstream and downstream demands, enforcement of approved associated gas development solution in all applicable oil development.

From the foregoing, it is imperative to understand that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is set to resolve the lingering challenges that have slowed the growth of the oil and gas industry over since 2003 when the last but one marginal field bid round was last carried out.

The oil bid round conducted by the former Department of Petroleum Resources (DPR) in May 2021 with 160 Nigerian companies shortlisted to acquire 57 marginal oil fields, was targeted at getting about 100 million barrels of oil from the fields.

The NUPRC, the successor regulator for the upstream sector, had been working hard to close out the bid round process and ensure that all contentious issues that dogged the process are effectively resolved to achieve the objectives of the Federal Government.

Against the backdrop of energy crisis in Europe occasioned by the Russia Ukraine war, a critical assessment of the Commission’s activities since the appointment of Mr Gbenga Komolafe, as its helmsman shows that the Nigerian Upstream Petroleum Regulatory Commission is methodically addressing bottlenecks around the 2020 marginal fields bid round in order to bring the process to a closure. This is expected to translate to increased oil production optimisation and strengthening of local capacity.

One of the key responsibilities inherited by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) following its inauguration last year was the conclusion of the 2020 marginal fields bid round.

This means that the 2020 exercise which more than doubled the capacity would no doubt pose greater challenges that would require careful handling

Marginal fields are smaller oil blocks developed by indigenous companies, which have remained unproduced for a period of over 10 years.

Prior to the enactment of PIA, fields were classified as marginal when they were not considered by licence holders for immediate development due to assumed marginal economics under prevailing conditions or left unattended for more than 10 years.

They also included assets that leaseholders considered for farm-out due to portfolio rationalisation or those, which the president may, from time to time, identify as such.

The concept of marginal field was initiated in the 90s as a federal government programme intended to offer Nigerian indigenous oil and gas companies the opportunity to play more active part in the exploration and production segment of the petroleum sector by owning and operating oil blocks.

The latest bid round began in June, 2020, and in May, 2021, 161 indigenous companies were shortlisted as successful bidders for the 57 marginal oilfields spanning land, swamp and offshore, put up for lease by the government.

The defunct DPR had progressed further by presenting letter of award to the successful bided companies at the award ceremony held in Abuja, last year.

Some of the companies, which emerged winners at the time, included: Matrix Energy, AA Rano, Andova Plc, Duport Midstream, Genesis Technical, Twin Summit, Bono Energy, Deep Offshore Integrated, Oodua Oil, MRS and Petrogas.

Others include North Oils and Gas, Pierport, Metropole, Pioneer Global, Shepherd Hill, Akata, NIPCO, Aida, YY Connect, Accord Oil, Pathway Oil, Tempo Oil, and Virgin Forest, among others.

Industry stakeholders believe that with Mr Komolafe, a thoroughbred Petroleum engineer in charge of the process, Nigerians can confidently look forward to a new era of fresh investment and development in the Petroleum industry.

Having held senior managerial positions at Pipelines and Petroleum Marketing Company (PPMC), Petroleum Equalisation Fund (PEF), and Petroleum Products Pricing Regulatory Agency (PPPRA), the agencies merged with the downstream section of the old DPR to form the new midstream and downstream authority, industry analysts believe he is in a familiar terrain and would certainly deliver on his mandate.

For instance, as PPRA’s operations general manager, he was credited for having successfully coordinated a seamless supply of petroleum products nationwide with multiplier sectorial effects in the Nigerian economy.

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