* OPTS, IPPG: Finance Act 2022 diminished benefits of PIA for oil sector
*IPPG tasks FG on policies to increase investments, competition in oil sector
Peter Uzoho
Nigeria through the state oil firm, the Nigerian National Petroleum Company Limited (NNPC) is looking up to a number of oil blocks and fields in the prolific Niger Delta basin to ramp up national oil production to between 1.7 million and 1.8 million barrels per day (bpd) between this year and end of 2024.
The Executive Vice President, Upstream, NNPC, Mr. Adokiye Tombomieye, gave the hints during a presentation at the just-concluded Nigeria Oil and Gas (NOG) Energy Week held in Abuja, with the theme: “Powering Nigeria’s Sustainable Energy Future”.
This was just as the multinational oil firms and the Nigerian independent producers under the aegis of Oil Producers Trade Section (OPTS) and Independent Petroleum Producers Group (IPPG) have condemned the Finance Act 2022, saying the Act has diminished the benefits brought by the Petroleum Industry Act (PIA) 2021.
However, represented by NNPC’s Upstream Business Advisor, Mr. Igandan Olanrewaju, during a panel session with the topic: “Defining the Roadmap for the Future of Nigeria’s Upstream Sector,” Tombomieye stated in a pre-panel presentation that the new production targets would be achieved through a couple of measures including asset integrity, production ramp up, well interventions, new drillings, alternative crude oil evacuation and improved security architecture.
He explained that NNPC in collaboration with its partners had resumed crude oil production in earlier challenged areas like the Oil Mining Leases (OMLs) 29, 18, and 24 and that they expect to ramp up to about 80,000 bpd with its joint venture (JV) partners by the third quarter (Q3) 2024.
Tombomieye said, “First oil to tank was achieved in NNPC E&P, former NPDC, OML 13 field of 25,000bpd and we expect to fully monetise that by the end of Q3 2023.
“Obodo field in OML 150 PSC is expected to bring up about 20,000bpd in late Q4 2023. Development in OMLs 71 and 72 is expected to add about 20,000 to 30,000bpd to national production by late Q3 2023.
“Within the deep water space we are concluding the Aboe turn around maintenance which will bring back about 10,000bpd, additionally within OML 130 we are opening up two injector wells and we expect that that should bring up another 10,000bpd Q3 2023.
“Kalaekule field development in OML 71/72 with West African Exploration and Production (WAYEP), our JV partner is expected to have about 20,000 to 30,000 barrels in national production possibly by late Q3 2023.
“We have Madu field in First E&P OML 85, which will have about 20,000 barrels by Q1 2024.
“Within the Deepwater space, we’re concluding the Aboe turnaround maintenance and that will bring out 10,000 barrels. Additionally, within OML 130, we’re hooking up two injector wells and we expect that that will bring another 10,000 barrels by Q3 2023.
“We’re streaming some of the Bonga wells and we expect to deliver additionally about 7,000 barrels from that.” Noting that upstream opportunities exist in the deep water space, the EVP explained that NNPC was working with its partners to achieve Final Investment Decisions (FIDs) on key major projects including the Bonga North field that would add 120,000bpd to national production.
He listed some of the projects as the Shells’s Bonga North field, saying the field was estimated to deliver 120,000 bpd production which would be tied back to the Bonga Floating Production, Storage and Offloading (FPSO) facility.
He added that the Bonga Southwest Aparo was like a 150,000 bpd development field.
For TotalEnergies, Tombomieye said the Preowei tie-back in OML 130, where the Egina and Aboe fields are located was like a 60,000 barrels tie-back to Egina.
For Chevron, the NNPC EVP maintained, “We have Agbami gas development in OML 127, which helps to increase compression capacity by 150 million scuf per day and monetise that gas.”
As relating to ExxonMobil, he explained that further opportunities exist in the Bosi gas development in OML 133 Production Sharing Contract (PSC) as well as the Owowo field development in OML 154 and 139, all operated by the American oil major.
In addition, Tombomieye, who also mentioned the Nwaduru field development in OML 129 and 135, said NNPC would take on all of those projects in collaboration with its partner to shore up production.
He stressed that realising the full potential of the projects listed above requires a conducive Investment climate, saying that was where the new NNPC structure comes into play.
Established under the auspices of the PIA, he said NNPC aimed to announce the oil and gas sector’s transparency, accountability and efficiency.
He added that by separating the regulatory and commercial functions of the sector, NNPC structure creates a level playing ground for investors, mitigates conflict of interest, and fosters a conducive environment to attract local and foreign investments.
Tombomieye said, “The streamlined governance and increased operational autonomy of NNPC will undoubtedly bolster investor conference and drive sustainable growth in the sector.
“Now, addressing the PIA’s impact on investor appetite for upstream development is very essential as the PIA represents a landmark reputation that will reform and revitalise the Nigerian oil and gas sector. While any significant regulatory change can create uncertainties, the PIA’s long-term benefits outweighs the short-term challenges.
“The Act introduces a progressive fiscal framework that provides a fair and competitive investment environment. Moreover, it promotes the development of host communities, local content participation and technologies transfer. These measures contribute to a more stable investment climate, attracting traditional players as well as new entrants in the upstream sector.”
OPTS, IPPG: Finance Act 2022 Diminished Benefits of PIA for Oil Sector
However, the NNPC EVP also pointed out that the multinational oil firms and the Nigerian independent producers under the aegis of Oil Producers Trade Section (OPTS) and Independent Petroleum Producers Group (IPPG) had submitted a petition regarding clarifications around specific sections of the Finance Act 2022, saying the Act would diminish the benefits of the PIA 2021.
“Lastly, ease of doing business, OPTS and the IPPG submitted a petition recently regarding clarifications around specific provisions of the 2022 Finance Bill following its passage by the National Assembly and presidential assent.
“They noted that these factors would diminish the benefits of the PIA implementation and reduce competitiveness of Nigeria’s oil and gas industry by introducing uncertain investment conditions,” Tombomieye said.
But to ensure sustainable delivery of benefits, he said putting in place enabling regulations were indispensable, noting, however, that it was essential to establish explicit and consistent framework that promotes stability, predictability and openness.
He added that by establishing a solid legal framework, Nigeria could creditably reduce investment risks and maximise the value of its hydrocarbon reserves.
IPPG Tasks FG on Policies to Increase Investments, Competition in Oil Sector
Meanwhile, the IPPG has called on the current Bola Tinubu-led government to pay priority attention to key areas in order to increase investments and competition in the nation’s hydrocarbon industry.
The group also declared its commitment to the development and growth of the oil and gas sector in alignment with the visionary goals of the new administration.
The Chairman of IPPG, Mr. Abdulrazaq Isa, made the call while delivering his keynote speech at the just-concluded 2023 Nigeria Oil and Gas (NOG) Energy Week in Abuja.
Represented by the Executive Vice Chairman of ND Western Limited, Dr. Layi Fatona, Isa stressed the need for a laser-focused delivery of key priorities to unlock Nigeria’s energy potential, fuel economic growth, diversify the economy, and enhance energy security sustainably.
Some of the priority areas highlighted by the IPPG chairman included establishment of a strong governance framework to guide the implementation of the Petroleum Industry Act (PIA) and facilitate systemic interaction and performance across the industry.
He said the aim was to ensure the overall delivery of the objectives, intent, and deliverables of the reforms.
He said another priority area was strengthening security in the Niger Delta to safeguard and stabilise the operating environment, stem crude theft, and enable seamless access to turn around oil and gas production declines, thereby unlocking growth in the short to medium term.
He called for the establishment of value-creating midstream and downstream sectors, which he noted, remains vital to catalyse and rapidly industrialise the Nigerian economy.
“The “Decade of Gas” policy and the Petroleum Industry Act (PIA) provide foundations for building integrated plans and roadmaps to realise sustained value from these subsectors,” Isa stated.
He also emphasised the need to enhance the competitiveness of Nigeria’s oil and gas industry through a strong, enabling and independent single regulator to address the challenges faced due to regulatory bifurcation.
While advocating that the government should expedite the conclusion of ongoing divestments by the international oil companies (IOCs), he warned that “further delays in the divestment process would have negative consequences such as production decline, loss of facility integrity, muted investments, and weak stewardship.
Emphasising that the next six to 18 months was critical in determining the future of Nigeria’s oil and gas industry, Isa harped on, “establishing a solid foundation for a secured energy future, ensuring energy availability, affordability, and sustainability for all Nigerians.”
He also commended the new administration for its bold and progressive steps taken within his first 40 days in office.
However, on the sideline of the NOG Week, IPPG hosted a Business Roundtable where notable industry stakeholders convened to proffer pragmatic solution on the convergence of policy formulation, execution and investor confidence in the Nigerian energy sector.
