The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), says it is planning a production based lending engagement to assist the 2020 Marginal Field Bid Round licences awardees to source needed capital, to facilitate full field development toward hitting first oil.
In a statement yesterday, the Commission Chief Executive, Gbenga Komolafe, said the engagement would be between the Commission, Petroleum Production Licence (PPL) Awardees, Exploration and Production (E&P) service providers and Nigerian banks.
“It is to provide platforms for strategic partnership/alliance between the awardees and the service providers for Well Re-entry and drilling services.
“The arrangement is to be offered on service fee recoverable by the service providers from production to be attached,” he said.
To this end, he said the Commission has already concluded plans to organise an E&P International Financing Road show in Abuja in the coming weeks for financiers, investment bankers, private equities, and multi-lateral institutional investors.
He explained that the initiative is to showcase the high value quick win opportunities available to investors in the recent PPL awards, the on-going National Gas Flare Commercialisation Programme, as well as the on-going Mini-bid awards.
This is to enhance sustainability, environmental and corporate governance requirements and to facilitate capital attraction by investors for the optimal and efficient development of the PPLs and other assets.
Corporate governance issues
To ease the challenges thrown up by the initial corporate governance issues that arose before the inauguration of the Petroleum Industry Act (2021), Komolafe said the Commission has developed a Corporate Governance Framework for upstream petroleum operations.
“The framework is currently at an advanced stage of internal review and stakeholders engagements required for its finalisation.
“This is to enhance sustainability, environmental and corporate governance requirements and to facilitate capital attraction by investors for the optimal and efficient development of the PPLs and other assets,” he said.
Furthermore, he said the Commission initiated the revision of the subsisting Extended Well Test (EWT) Guideline to facilitate dynamic data gathering and accelerate the achievement of first oil to enhance early cash flow and speed up the journey to first oil.
He added that this strategy has already yielded positive results with 16 companies submitting Field Development Plan (FDP), two already commencing unitisation processes, six re-entries, and two gone through the EWT.
Komolafe however said the Commission is not unmindful of the protracted dispute among some of the awardees triggered by shareholder disagreements and/or misunderstanding.
“We are collaboratively engaging the parties and mediating to facilitate early closure and diligent progression toward achieving the expected regulatory milestones, including value creation and hitting first oil.
“Since the award of forty-seven (47) PPLs to solely Nigerian entities in June 2022, the commission has made concerted efforts within the stipulations of the law, to provide statutory guidance and support toward the progression of the assets to field development.
“Steps taken include the convocation of the Regulatory Induction Programme for PPL awardees to enable them have the requisite understanding of the statutory protocols from the award to first oil,” he said.
Also, there was a week-long tripartite engagement in Lagos for all awardees and initial asset owners in 2022, with about 30 entities in attendance.
“During that event, both the awardees and former asset owners resolved all impediments to the smooth take over by the awardees and operation to first oil.
“That event set the stage for engagements on issues required to fulfil initial work programme obligations,” he added.
He listed the areas that were presented and rigorously deliberated upon included Royalty and Tax administration; Data Exchange Protocol and Leasing requirements; Field Development Plan under the PIA (2021); Permitting Processes for Drilling and Re-entry Applications; Production Accounting; Facilities Deployment; and Host Communities’ Development.
