ON behalf of the Management and Staff of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) I welcome you to this memorable press briefing which is principally to carry you along on our journey so far since our inauguration as the pioneer management team of this Commission, with me as the pioneer Commission Chief Executive (CCE).
You would recall that NUPRC came into being following the passage of the Petroleum Industry Act 2021 which was signed into law by President Muhammadu Buhari on 27thAugust 2021. The Commission therefore went through a transition from the defunct Department of Petroleum Resources (DPR) to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). The top management of the Commission was inaugurated on October 22, 2021.
The passage of the PIA (2021) heralded the dawn of a new era in oil and gas business in Nigeria. Although the process underwent various revisions, its passage laid to rest previous uncertainties around fiscal and regulatory framework; and further conferred on the Commission an additional responsibility as commercial regulator in addition to its role as technical regulator.
In furtherance of the stipulations of the relevant sections of the PIA, the current top management set to work in line with government aspirations and worked assiduously towards transforming NUPRC into a world-class organization through the pursuance of far-reaching reforms. The goal is to promote sustainable value creation from Nigeria’s petroleum resources for shared prosperity and positioning the establishment as Africa’s leading regulator. Our core values remain Professionalism, Responsiveness, Ownership, and Integrity.
The PIA saddled the NUPRC with the statutory responsibility of ensuring compliance to petroleum laws, regulations and guidelines in the Oil and Gas Industry. The discharge of these responsibilities involves monitoring of operations at drilling sites, producing wells, production platforms and flow stations, crude oil export terminals, and all pipelines carrying crude oil, and natural gas, while carrying out the following functions, among others:
- Supervising all Petroleum Industry operations being carried out under licences and leases in the country.
- Monitoring the Petroleum Industry operations to ensure that we are in line with national goals and aspirations including those relating to Flare down and Domestic Gas Supply Obligations.
- Ensuring that Health Safety& Environment regulations conform with national and international best oil field practice.
- Maintaining records on petroleum industry operations, particularly on matters relating to petroleum reserves, production/exports, licences and leases.
- Advising Government and relevant Government agencies on technical matters and public policies that may have impact on the administration and petroleum activities.
- Processing industry applications for leases, licences and permits.
- Ensure timely and accurate payments of Rents, Royalties and other revenues due to the government.
- Maintain and administer the National Data Repository (NDR).
Achievements in the Last One Year
Gentlemen of the Press, as indicated earlier, the management, leading a team of seasoned professionals and support services staff, set to work immediately after inauguration; and we are today glad to say that in the first one year of our operation, the Commission has achieve fundamental milestones in our mandate.
We were focused on laying a solid foundation for our regulatory functions and in pursuing that, we have drafted Environmental Remediation Fund Regulation and the Upstream Environmental Regulation and Upstream Petroleum Safety Regulation, both of which have been subjected to stakeholder review in line with the PIA (2021). The Commission also successfully launched the Host Communities Regulations to guide the implementation and operationalisation of the Host Communities Development Trust (HCDT), as also enshrined in the PIA. The Commission is putting in place modalities to ensure the smooth take-off of the various Trusts in a timely manner.
In the area of Development and Production, the Commission has within the past one year achieved, among others, the following:
- Declaration of the nation’s reserves which stands at Oil and Condensate Reserves: 37.046 MMMB, this indicates an increase of 0.37% compared to 2020 figures. Life index stands at 60 years. Gas Reserves: 208.62 TCF, this indicates an increase of 1.01% compared to 2020 figures. Life index stands at 88 years.
- Automation of Upstream work processes is almost completed. It is planned to improve the efficiency of our work processes and become operational before the end of year 2022.
- Ikike first oil was officially celebrated in September 2022. It is expected to deliver peak production of 50,000 barrels of oil equivalent per day by the end of 2022.
- Deployment and commissioning of Aiteo 120kbd barge mounted crude oil processing Facility to minimise crude oil theft and vandalism on the NCTL.
- Deployment and commissioning of Tenoil 10kbd Early Production Facility (EPF) increase crude oil daily production by 10kbd.
- Regularization and commissioning of Halkin 5kbd EPF at Atala OML-46.
- Inauguration of an integrated industry-wide study to ascertain shut-in wells that can be reactivated in the short, medium, and long-term. The primary aim is to boost production and guide investment planning. In addition, the study aims to optimise recovery factor via identification of EOR/IOR candidate wells and recommend low hanging potentials to boost National production. The study has been concluded and is in the report writing stage.
- Development of the Advanced Cargo Declaration Regime, and Crude oil and LNG Tracking (COLT) are also in process.
- Granted 274 export permits for a total of 480,863,863 barrels of crude oil/condensate/EGTL between Q4 2021 and Q3 2022.
- Completed establishment of ELI-AKASO crude oil export terminal.
- Publishing of up-to-date data on National Crude oil production on the Commission’s website has ensured transparency of data and information. It has provided accurate volume to both internal and external users.
- In line with the Provisions of Section 108 of the PIA 2021, commenced engagement and sensitisation of all operators to submit gas flare elimination and monetization plan.
- Ten (10) High Impact Technologies, innovation, and Solutions have been successfully qualified and adapted into the Nigerian Oil and Gas Industry. The high impact technologies aim to increase oil discovery and production, reduce cost of Pipeline Maintenance and Integrity threshold etc.
In the area of Exploration and Acreage Management Directorate, the Commission has so far achieved the following:
- Award of 47 Petroleum Prospecting Licences to winners of marginal fields during the 2020 Marginal Field Bid Round.
- Development of Model Licence and Model Lease in conjunction with Legal and Compliance and Enforcement (C&E) SBU.
- Renewal of OMLs 128, 130, 132, 133 and 138
- Acquisition, processing, and interpretation of 82,175 sq km of multi-beam data and Geochemical analysis of standard cores and heat flow data over the Niger Delta offshore.
Gentlemen of the Press, the Commission has also made significant in-roads in the areas of Health, Environment and Security. Apart from the Host Communities Regulations to guide implementation and operationalisation of the HCDT, we also developed and automated the Host Community Development Trust reporting, monitoring, and data management portal. Settlors have already commenced submission of applications on the portal; we have had successful engagements with the OPTS for the assignment of Littoral communities to Deep water operators with reference to Regulation 6(1) (d) of the Host Communities Development Regulations (2022). Modalities for the assignment of littoral host communities to deep offshore operators have been worked out. Also, the Commission is working in synergy with the National Boundary Commission (NBC) to map the littoral host communities to deep water operations.
In the area of Economic Regulation and Strategic Planning, the Commission has commenced the implementation of the Financial Viability Monitoring of licensees, lessees and permit holders in line with Section 7(y) by requesting the companies to submit their 2020 and 2021 Audited Financial Statements; as well as the review of Crude Handling and Crude Transportation Agreements in line with Section 174(9) with a view to ensuring the tariffs do not negatively impact on the cost of production.
Under our stewardship, the Projects and Cost Monitoring activities witnessed a new lease. A new model to estimate the value of assets and determine the Signature bonus, Renewal Bonus and Good and Valuable Consideration was developed in line with the provisions of the PIA (2021), with the Renewal bonus valuation completed for OML 125, 128, 132, 133, 138 and 130. Economic analysis of the following Field Development Plans (FDPs) were assessed for viability of investment with respect to “Government take”, cost and Decommissioning and Abandonment:
- Oyo Field Development Plan submitted by General Hydrocarbons.
- Ohaji South Field Development Plan submitted by Seplat Petroleum Development Company.
- Abura Field Development Plan submitted by Nigerian Petroleum Development Company.
- West Isan Field Development Plan submitted by Chevron Nigeria Limited.
- Tunu Field Development Plan submitted by Shell Petroleum Development Company.
- Okono Field Development Plan submitted by Nigerian Petroleum Development Company.
- Obiafu-Obrikum Field Development Plan submitted by Nigerian AGIP Oil Company.
- Ogbele Field Development Plan submitted by Niger Delta Petroleum Resources.
- Ethiope Field Development Plan submitted by Seplat Petroleum Development Company.
Also, the Commission publishes a weekly report of our assessment of the competitive position of Nigeria’s Crude Oil in the International Oil market and has commenced the benchmark of cost of operations in the industry. Cost is being benchmarked according to terrain (onshore, offshore, and deep offshore).
One of the focus areas for this management is to create value for our operations. In the last twelve months, we have internalised and managed the provisions of the Petroleum Act 1969 and Petroleum Industry Act 2021 with regards to its applicability or otherwise of its fiscal provisions to stakeholders in the industry to achieve orderly transition; developed Royalty Models that give effect to the fiscal provisions of the Petroleum Industry Act (PIA) with respect to Royalty by Production in tranches and Royalty by Price, with linear interpolation and year by year changing base price; applied the PIA Model terms in the Royalty assessment of OML 130 (Akpo and Egina Fields) bringing the fiscal terms prescribed to life in a producing asset; and administered penalties to defaulters of Royalty payment in line with the 2020 Production Drilling and Production Regulations and PIA.
Gentlemen of the Press, also in our internal operations, we have:
- Developed and launched the RLIS Payment Portal with the ICT AGILE Team
- Developed in-house on-the-job training manual for new and existing Staff of the Commission.
- Improved revenue performance (from NNPC debt recovery) via continuous engagements and formal reminders sent to NNPC as it transitions to an incorporated company.
- Submitted NUPRC Quarters 1 & 2 (Half year 2022) revenue performance justification to the Presidential Revenue Monitoring and Reconciliation Committee (PRM&RC) – Budget Office of the Federation.
- Concluded Quarter 1 2022 Fiscal Reconciliation exercise with E&P Companies
- Commenced Quarter 2 2022 Fiscal Reconciliation exercise with E& P Companies.
- Collaborated with relevant stakeholders (CBN, OAGF, BrandOne, NUPRC ICT and other Directorates of the NUPRC) to find lasting solutions to revenue assurance issues with respect to monitoring and review of automated platforms (REMITA, OGISP, COTEX, GATEX, IMPEX etc.).
- Collaborated with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in streamlining/delineating Miscellaneous Oil Revenue (MOR) and Internally Generated Revenue (IGR) heads appropriately.
- Maintained consistent Revenue stewardship to all internal and external Stakeholders.
- Concluded and will be submitting the NUPRC Quarter Three 2022 revenue performance justification as above by end October 2022.
The Commission is collaborating with a number of relevant agencies to undertake projects in the area of Climate Change/Green House Gas (GHG) emissions management, including supporting the review and assessment of the national GHG emissions as part of series of workshops that led to revision of the Nationally Determine Contributions (NDCs) policy. This was submitted to the United Nations Framework Convention on Climate Change (UNFCCC) ahead of 26th Conference of Parties (COP26) summit in Glasgow, Scotland 2021. The fugitive methane emission reduction target (60%) from Oil & Gas was added to Nigeria’s NDC for the first time based on robust data provided by the NUPRC. The development of guideline on the management of fugitive methane and greenhouse gases (GHG) emissions in the Upstream sector has been finalised. This policy document which is to enable the Commission drive emission reduction and mitigation targets of the National Determined Contributions (NDCs) will be approved and launched within the shortest practicable time.
Under the Produced Water Management (PW) Management, the Commission is engaging service providers proposing the idea of deploying technologies for the treatment of Produced Formation Water to portability for reuse within and outside the facility to meet the Commission’s zero-discharge policy. This will also help the new Petroleum Prospecting Licences (PPLs) and others with similar challenges in complying with our regulations on the management of produced water. Also, in a bid to domesticate diving operations in Nigeria and reduce capital flight, the Commission in collaboration with the Petroleum Training Institute (PTI), Nigerian Content Development and Monitoring Board (NCDMB) and Shell Nigeria Exploration Company (SNEPCo), is currently championing the upgrading/standardisation of the diving faculties in PTI Warri to a Diving Centre of Excellence complete with world class amenities in order to obtain the highly valued accreditation of the International Maritime Contractors Association ( IMCA).
Looking ahead: The next one year
The Commission projects in the next one year to embark on the development of a regulatory framework to reduce facilities development projects delivery costs through effective participation and Regulation of Concept, Design and Equipment selection; as well as the development of guidelines for facilities development concept to ensure that options for utilizing “infrastructure hubs” are fully exploited to reduce CAPEX and project delivery times.
It plans initiating the review and drafting of a new Gas Flare Regulations further to the provisions of the Petroleum Industry Act 2021(PIA 2021) and updating the Technology Adaptation Guidelines and Technology Plan with input from the industry. Development of Barging and Trucking System/Portal has already reached User Acceptance Test Phase; and the Commission has commenced developing Draft Guidelines for Fluid Sampling and Characterisation in Oil and gas field operations in Nigeria.
In the area of Health, Safety, Environment and Community matters, the Commission is working on On-boarding of all identified Host communities, incorporation of Trusts and operationalisation; Signing off and operationalisation of the Green House Gas Emission Monitoring Guideline; Gazetting and operationalisation of the Upstream Petroleum Environmental Remediation Fund Regulations, the Upstream Petroleum Environmental Regulations, and the Upstream Petroleum Safety Regulations; and State-wide sensitization workshop for host communities on provision of PIA 2021.
The Commission is committed to the National Data Repository and is planning to conduct quality check of all data deposited in the NDR with a view to identifying data integrity and gaps for immediate closure; commence the deployment of a robust tested and trusted Data Management Solution with the capability of handling the diverse data types being generated in the Upstream Oil and Gas activities; develop a data transaction handling platform for the submission and processing of information between the NDR and all stakeholders; expand NPMS and COLT platforms towards assisting the Commission in curtailing Crude Theft and monitoring Oil and Gas production activities; commence synchronisation of NDR Platform at of NUPRC-NOR Disaster Recovery Site; and Benchmark NDR operations for efficiency and in line with its current mandate post PIA.
Gentlemen of the Press, the achievements listed above are only in our core operational areas. The Commission has made giants strides also in the areas of revenue budget performance and administrative efficiency. We are grateful to you for being part of our journey so far. We are committed to delivering on our mandate as enshrined in the PIA (2021) and are hopeful that the second year will witness more achievements.
Thank you for your kind attention.
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