By Ibrahim Musa
With clear mandates – ensuring compliance with petroleum laws, regulations and guidelines, monitoring of operations at drilling sites, producing wells, production platforms and flowstations, crude oil export terminals, and all pipelines carrying crude oil, and natural gas, supervising operations being carried out under licenses and leases, monitoring operations to ensure that they are in line with national goals and aspirations – the Nigerian Upstream Regulatory Commission, NUPRC, occupies a very influential position in Nigeria’s oil and gas industry.
The NUPRC also has the mandate to monitor operations to ensure that they are in line with national goals and aspirations, including those relating to Natural Gas Flare elimination & monetization, Domestic Gas Delivery Obligations and Domestic crude oil supply obligations and ensures that Health Safety& Environmental regulations conform to national and international best oil field practice.
The agency further maintains records on upstream petroleum operations, particularly on matters relating to petroleum reserves, production/exports, licenses and leases; advice Government and relevant Government agencies on technical matters and public policies while processing upstream petroleum–related applications for leases, licenses and permits as well as ensure timely and accurate payments of Rents, Royalties and other revenues due to the government from upstream petroleum operations while administering the National Data Repository (NDR).
Consequently, some persons, including politicians and analysts, who are aware of its various roles, have come to perceive the actions of NUPRC more from the realm of politics than economics. They keep a close watch on the activities in the agency and would complain about almost every development that does not fit into their pre-conceived idealism, instead of embracing realism based on purely economic considerations.
Take the latest efforts to move some personnel, especially field officers to Lagos, where many oil and gas companies have offices for example. The truth is that with the implementation of the Petroleum Industry Act, a comprehensive legislation, targeted at achieving restructuring, repositioning, increased productivity and transparency and accountability, the NUPRC inherited many personnel and its current building in Abuja from the defunct Department of Petroleum Resources, DPR. Sadly, many personnel do not have offices but work with their laptops from unsuitable locations, including conference rooms and corridors.
Meanwhile, NUPRC still bears the financial and other costs of taking them frequently to Lagos, Warri and Port Harcourt to carry out their official duties. After due consideration and in line with President Bola Tinubu’s commitment to cut costs, eliminate wastages and enhance service delivery, the Engr. Gbenga Komolafe-led NUPRC started consulting with key stakeholders, especially the labour unions. The consultation culminated in the taking of the decision, targeted at reducing pressure on accommodation in Abuja, maximizing the use of the Lagos-based office, reducing operational costs, improving organizational efficiency and enhancing industry growth.
Sadly, the decision has been unduly politicized and misconstrued to mean leaving Abuja. This constitutes a distraction to the NUPRC under the leadership of Engr. Komolafe that means so well for the industry and Nigeria as illustrated in the bold steps taken to make a positive impact in the past few years. Already, NUPRC has developed regulations, giving meaning and intent to the PIA, to ensure that all bottlenecks associated with regulatory processes are eliminated, to entrench seamless upstream petroleum operations. The gazetted regulations include: Petroleum Licensing Round Regulations 2022, Petroleum Royalty Regulations 2022, Conversion and Renewal (Licences and Lease), Nigeria Upstream Petroleum Host Communities Development Regulations 2022, Domestic Gas Delivery Obligations Regulations 2022, Nigeria Upstream Petroleum Measurement Regulations 2023, Production Curtailment and Domestic Crude supply Obligation Regulations, 2023, Frontier Basins Exploration Fund Administration Regulations, 2023, Nigeria Upstream Decommissioning and Abandonment Regulations 2023, Significant Crude Oil and Gas Discovery Regulations, 2023, Gas Flaring, Venting and Methane Emission (Prevention of Waste and Pollution) Regulations, 2023 and Nigeria Upstream Petroleum Unitization Regulations, 2023.
Also, the 14 draft regulations awaiting gazetting include Upstream Petroleum Fees and Rent Regulations, Acreage Management Drilling and Production Regulations, Upstream Environmental Remediation Fund Regulations, Upstream Petroleum Safety Regulations, Upstream Petroleum Environmental Regulations, Upstream Petroleum Measurement Regulations, Advance Cargo Declaration Regulations, Draft Upstream Commercial Operations Regulations, Draft upstream Petroleum Code of Conduct & Compliance Regulations, Draft Upstream Petroleum Development Contract Administration Regulations, Draft Upstream Revocation of licences and Lease Regulations, Draft Upstream Petroleum Assignment of Interest Regulations, Draft Nigerian upstream Petroleum (Administrative Harmonisation) Regulations and Draft Amendment to the Nigerian Upstream Petroleum Host Communities Development Regulations 2022.
The Commission has also held several Stakeholder Engagements on the Commission’s Draft Regulatory Framework for Energy Transition, Decarbonisation and Carbon Monetisation and incorporated the inputs arising from the engagements into the regulatory framework, which will not only govern the activities of the newly established Energy Transition and Carbon Monetisation Division of the Commission but those of the entire industry in considering Energy Transition in oil and gas field development.
Engr. Komolafe has attracted many investors expected to boost investment in the nation. The reserves report as of 1st January 2022 put the nation’s oil and condensate reserves status at 37.046 billion barrels, with a life index of 60 years, representing an increase of 0.37% compared to 36.910 billion barrels as of 1st January 2021. On the other hand, the nation’s reserves status stood at 208.62 (trillion cubic feet) TCF with a life index of 80 years, representing an increase of 1.01% compared to 206.53 TCF as of 1st January 2021.
He has taken deliberate steps to drive the Decade of Gas programme declared by the Federal Government through 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). Engr. Komolafe has also assisted many companies/projects to hasten development and achieve their first oil production. Some of the fields include: Anyala field (First E&P), Ikike (Total), Efe field (Newcross), Utapate, (NEPL), and Akubo Field (SEEPCo).
He contributed immensely to the funding of the Federation’s activities. In the year 2021, the total revenue generated was N2.9 trillion which signified a 44.82 per cent increase in revenue generated as compared to the 2020 figure which stood at N2.0 trillion. On the other hand, the total revenue generated in the year 2022 was N3.781 trillion, indicating an increase of 30.38 per cent.
In 2024, plans are underway to hold the licensing round in line with Section 73 of the nation’s PIA. The Engr. Komolafe-led Commission will optimise the functionality of automation systems by enhancing the efficiency of existing optimising tools and the streamlined deployment of new ones while collaborating with relevant government entities to grow oil and gas production in the best interest of all stakeholders, including investors and Nigeria.
This and other plans are targeted at increasing oil and gas production and extending foreign exchange generation for the government and other stakeholders. As Engr. Komolafe disclosed at the just-concluded Petroleum Technology Association of Nigeria (PETAN) Sub-Saharan Africa International Petroleum Exhibition and Conference in Lagos, that the operations of the agency will continue to be driven by modern technology, improved transparency in hydrocarbon measurement and accounting and collaborative work programme administration with the exploration & production companies.
Indeed, the planned movement of field officers to Lagos should be endorsed and supported by everyone as it promises to not only bring NUPRC much closer to the oil and gas companies and other stakeholders but also position the agency to operate more efficiently while minimizing cost and maximizing returns to the government and nation.
Ibrahim Musa is a Lagos-based Energy Analyst