The Nigerian Upstream Petroleum Regulatory Commission is exploring all available options to ensure Nigeria meets its 40 billion barrels oil reserve and three million barrels per day production targets and ultimately boost the nation’s revenue and overall economy, Peter Uzoho writes
Oil price is on its way to the $100 per barrel mark projected by some analysts, as it traded at $95 per barrels last week. This is supposed to be a cheery development for Nigeria. But it is not, mainly because the country is not producing the kind of volume that can enable it to really maximize the benefit of the price rally.
The persistent low oil and gas production and declining oil reserve, caused by waning investments in the exploration and production chain of the Nigerian oil and gas industry, has impacted the country’s economy adversely.
Today, Nigeria is in serious revenue crisis because of the huge drop in oil revenue, leading to the government resorting to execessive borrowing to meet its statutory governance obligations to the people.
The many years of under-investment and inactivity in the oil and gas sector, attributed to the unclear and unfavourable investment climate, coupled with unenticing fiscal framework, prompted the expeditious passage and signing into law of the Petroleum Industry Act (PIA) in July and August, 2021 respectively.
One of the landmark provisions of the Act was the establishment of two new regulatory agencies -the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRC).
The implementation of the PIA, which is still work in progress, led to the appointment of one of Nigeria’s astute petroleum experts of many decades of industry experience and knowledge, Mr. Gbenga Komolafe, as the chief executive officer of NUPRC.
Upon his confirmation by the Senate and his subsequent inauguration, Komolafe left no one in doubt as to what he is bringing to the table as the chief regulator of the hydrocarbon upstream sector.
Addressing the commission’s staff in Abuja, in October last year, immediately after his Inauguration, while letting them know the task ahead of them, Komolafe declared that the immediate priority of the new petroleum industry regulator was to raise the country’s crude oil production from September’s 1.4 million barrels per day to about 2.4 million bpd in the coming months – a short term strategy of the commission.
As at that time, out of the total of 1.614 million bpd allocated to Nigeria in September by the Organisation of Petroleum Exporting Countries (OPEC), the country was only able to pump 1.399 million bpd during the month, against a reference production figure of 1.829 million bpd.
Komolafe noted that the proper execution of the PIA would translate to landmark transformations in the industry that are expected to usher in massive investment in the sector for enhanced revenue to fund Nigeria’s social budget.
He added: “Incidentally, we are at a critical and significant moment in the life of the industry whereby energy transition from fossil fuels to cleaner energy is competing with the need for us to raise the bar of our crude oil and gas production from the current level of 1.4 mbbls/d to 2.4 mbbls/d.
“We are not unmindful that the expectations are high, but we are quite determined to surmount the task ahead and hit the ground running”, he had said.
Consequently, Komolafe set out to work. He segmented all the critical industry stakeholders and began meeting them one after the other to feel their individual purse and pains, get useful inputs on how to achieve the target.
PLANS FOR OIL RESERVE, PRODUCTION GROWTH
Apparently adopting less-talk-more-action strategy, in November last year, the NUPRC CEO rolled out before industry players in Lagos, some of the aggressive steps and plans to help the country achieve the 40 billion barrels oil reserve and three million barrels per day (bpd) targets.
Realising that without active collaboration between the public and private sector, nothing meaningful would be achieved, Komolafe said part of the strategy was the initiation of Public, Private, Partnership (PPP).
The partnership involves security agencies, private operators and other stakeholders to address the challenging issues of crude oil theft, sabotage and pipeline vandalism.
Other measures being taken by the commission, according to Komolafe, included ollaborative efforts between operators and communities, and the deployment of state-of-the-art technology to monitor pipelines in remote areas.
He said, “Already, as a commission, we have commenced consultation with relevant stakeholders towards the achievement of these objectives.
“A more aggressive policy on routine Asset Integrity Management to cub crude leakages and spills caused by aging facilities will be adopted.
“An initiative to reduce the cost of production while also benchmarking cost across terrain is ongoing.”
He added that the commission was making provision to incentivise drilling targets at deeper horizons and to also provide guidelines to ensure seismic acquisition design to image deep plays.
He said attractive incentive was being made to encourage multi-client and speculative data companies to acquire state-of-the-art data in open acreage to facilitate exploration activities.
He regretting the decline in oil production, which he attributed to theft, insecurity, aging facilities, decline in exploration and production enhancement initiatives.
Komolafe assured that, as the upstream technical and commercial regulator, the commission was committed to addressing the issues causing the decline in daily production in order, “to increase our reserves to 40 billion barrels and raise our production to three million barrels per day.”
OIL Revenue Recovery Initiative
Nigeria loses about 150,000 barrels of oil a day to illegal tapping of pipelines, amounting to a loss of about $4 billion every year, or 10 percent of the country’s annual budget.
As part of the efforts to end this humongous oil revenue losses and attendant impact on the nation, NUPRC recently announced introduction of ‘Industry-Wide Oil Revenue Recovery Initiative’, with a committee that includes several security agencies.
“The positive impact of that will be witnessed very soon because there is a collaborative approach to stop the incident, especially as it affects the federation’s revenue. You should not expect me to disclose the strategy,” Komolafe said.
He said the ambitious recovery plan would double the nation’s output from 1.5 million barrels of oil a day to 3 million barrels daily.
The initiative has attracted commendations from concerned energy experts, who viewed it as a step in the right direction.
For instance, the Chief Executive Officer of New Hampshire Limited, a meter manufacturing company, Mr. Odion Omonfoman, said the revenue recovery plan was a positive one.
He said the money being lost on oil theft was enough to fund sizeable number of infrastructure projects in critical sectors.
He said, “That should have been $4 billion that would have accrued to the federation, which should have been used to build schools, hospitals, roads, infrastructure.
“But that money is pretty much stolen and doesn’t come back to Nigeria. It also harms investment in the oil and gas sector. If you notice, a lot of the internal oil companies (IOCs) are divesting from onshore and shallow water assets that they used to own.
“Any action aimed at reducing the amount of sabotage, including involving the local communities who literally are unwilling participants in this business will be helpful,”
“At the end of the day, we must have a strategy that ensures that the local communities benefit from crude oil and gas productions within their area. You must have some form of incentive that will ensure and allow continuous production and community participation in protecting oil and gas assets.”
Omonfoman, however, advised that while promoting initiatives that would boost oil production and generate more revenue, government authorities must also consider local communities that are suffering from environmental hazards resulting from oil production.
Culled from ThisDay
