NUPRC Begins Fresh Oilfields Bid Round, Offers 17 Blocks for Sale

 •Begins due diligence on renaissance group’s bid to acquire SPDC’s $2.4bn oil assets

•Picks S&P Global, Boston Consulting Group as consultants  

•Komolafe says N4.3tn remitted to FG in 2023

Emmanuel Addeh in Abuja

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) yesterday announced that it had begun processes for the 2024 oil bid round with 12 oil blocks and five deep offshore assets from last year’s bid exercise.

Also, the commission disclosed yesterday that it had started its ‘due diligence’ on Renaissance Consortium’s planned acquisition of Shell Petroleum Development Company (SDPC) onshore oil assets for $2.4 billion.

The Commission Chief Executive, Gbenga Komolafe, spoke at two separate events in Abuja, at the maiden NEITI House Dialogue in Abuja and at a workshop in Abuja organised to streamline the issues in the proposed divestment of the participating interests held by the SPDC.

Komolafe, who said the oil bids will be concluded by January next year, stated that the new green field oil blocks on offer include six acreages located on continental shelf, four deep offshore blocks and two onshore blocks in the Niger Delta.

He explained that the commission had put in place regulations to create a conducive investment environment by ensuring regulatory certainty, vacating entry barriers and promoting global competitiveness.

The NUPRC boss stressed that the licencing round will be conducted in a fair, and competitive bidding process in a non-discriminating manner.

He noted that some of the criteria required for acquiring the blocks include technical competence, financial capacity and viability.

“The licensing round that we put in place is designed to enhance quality data sets and is going to be conducted in a fair, transparent, and competitive bidding process and in a non-discriminatory manner as stipulated in Sections 73 and 74 of the Petroleum Industry Act (PIA).

“It is gratifying that in the last three years, you will see the growth of revenue generation by the commission. The commission has successfully been meeting and surpassing the revenue targets set by it, and that equally speaks to the transparent approach in revenue reporting by the commission.

“Permit me to conclude by reassuring all our stakeholders, members of the civil society, of our commitment to sustaining our ongoing efforts in ensuring optimal development of Nigeria’s petroleum resources.

“This would be a good opportunity for us to, as we are planning to commence the 2024 licensing round, that it would be a good opportunity to launch this critical programme before these eminent stakeholders are seated here today.

“So, ladies and gentlemen, it is my pleasure and honour to announce to you that the 2024 licensing round as described in the Petroleum Industry Act will commence from the end of this month. The process has commenced and will set very clear criteria that will guide the implementation of the process from beginning to the end in a transparent manner.

So in totality we target to complete 17 blocks on offer between now and early next year.  High Impact Regulatory Initiatives and Achievements

He also disclosed that the Commission generated N4.344 trillion in revenues in 2023, a rise of 15 per cent from N3.78 trillion generated in 2022, N2.9 trillion in 2021 and N2 trillion in 2020.

The NUPRC also began its ‘due diligence’ on Renaissance Consortium’s planned acquisition of SDPC onshore oil assets for $2.4 billion.

In January this year, oil giant, Shell agreed to the transaction, announcing that when the deal is completed, the oilfields will be operated by the new group, comprising ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, a Swiss firm.

However, Shell which has operated in Nigeria for over six decades, stated that the consummation of the deal was still subject to approval by the federal government.

Speaking at a workshop in Abuja organised to streamline the issues in the proposed divestment of the participating interests held by SPDC, Chief Executive of the commission, Gbenga Komolafe, noted that the event was to identify a successor who not only possesses the requisite financial resources but also demonstrates the technical expertise to responsibly manage the assets throughout their lifecycle

Komolafe insisted that parties must ensure that the inherent environmental and end-of-life liabilities, including decommissioning liabilities, are accurately identified, and assigned to the party best equipped to bear the associated risks.

According to him, this necessitates a comprehensive understanding of regulatory requirements, industry best practices, and the unique challenges inherent in oil and gas operations.

Komolafe also maintained that the regulatory agency was not averse to divestments in the oil and gas sector, emphasising that the NUPRC was committed to free entry, free exit business principle aimed at encouraging investors in the sector.

He underscored the importance of providing a stable regulatory framework that instils confidence and encourages investment, explaining that the NUPRC was implementing robust measures to streamline regulatory procedures and eliminate unnecessary barriers to investment.

Accordingly, the commission announced that it has developed a divestment framework consisting of seven cardinal pillars to guide the assessment of applications for ministerial consent to the SPDC divestment and other similar divestments.

He listed them as technical capacity, which highlights that the successor entity must demonstrate proven and verifiable capacity to operate the asset vigorously and in a business-like manner.

On the need to have adequate financial muscle, the commission disclosed that the NUPRC shall assess the prospective successor entity’s balance sheet and financial viability and verify readiness to undertake a defined work programme and fulfil required obligations on the assets.

“The acquiring entity must in line with the interest of the nation be ‘fit and proper’ persons in the eyes of the law. Clear evidence of the resolutions of legacy debts and legal encumbrances must be established and appropriate mechanisms to manage residuals agreed upon,” Komolafe said of the legal requirements.

As for decommissioning & abandonment (D&A) , the NUPRC boss observed that the applicable D&A costs must be diligently assessed and parties must ensure settlement of outstanding obligations.

The commission, he said, will ensure that potential exposure of the Nigerian government to decommissioning liabilities is averted.

Relating to host community trust/environmental remediation fund, Komolafe pointed out that the commission shall assess the status of Host Community Trust Fund (HCDF) obligations and ensure the robustness of the successor entity’s adherence to decarbonisation plans and sound Environmental Social & Governance (ESG) principles.

“The commission shall implement a robust assessment mechanism to avert undesirable labour union issues and disharmony arising from the divestment process. Concerned parties shall endorse a ‘Certificate of Settlement’ to validate alignments reached on all labour issues (staff welfare, benefits, entitlements as well as disengagement, redundancies, retirement etc.),” he added.

The aim, he said,  is to ensure the nation averts socioeconomic disruptions arising from failure to resolve labour issues that might result because of post-divestment.

Besides, he stressed that the commission shall ensure that all data mined during the operating life of the asset are repatriated to the National Data Repository (NDR) in line with extant regulations.

The SPDC JV assets are currently operated by the company on behalf of its JV partners namely: NNPC and Total Upstream Nigeria Limited as well as Nigeria Agip Oil Company.

The JV OMLs were originally awarded as Oil Exploration Licence -1(OEL-1) on  January 1, 1949 covering the whole of southern Nigeria and Cameroon. Ultimately, the assets were converted to OMLs on  April 1, 1962 and subsequently renewed in 2014 and 2018 for 20 years.

To date, the assets have achieved a cumulative production of 5.35 billion barrels of crude oil, 165. 57 million barrels of condensate, 9.51 trillion cubic feet of associated gas and 3.75 trillion cubic feet of non-associated gas, contributing immensely to the achievement of Nigeria’s crude and condensate output.

The assets being considered have an estimated total reserve of 4.96 billion barrels of oil, 1.77 billion barrels of condensate, 28.16 trillion cubic feet of associated gas and 28.11 trillion cubic feet of non-associated gas.

Additionally, the assets hold P3 (possible) reserves estimated at 2.85 billion barrels of oil, 850.85 million barrels of condensate, 11.3 trillion cubic feet of associated gas and 12.26 trillion cubic feet of non-associated gas.

“Let me emphasise that the NUPRC wholeheartedly welcomes investment in the Nigerian upstream petroleum sector. We recognise the critical role investment plays in driving innovation, creating employment opportunities, and ultimately fuelling economic prosperity for our nation and its people.

“Therefore, we are always eager to welcome local and international investors who choose to invest in the Nigerian upstream petroleum sector. We are fully committed to facilitating and supporting investment initiatives that align with our national development goals.

“However, we emphasise that cooperation with the investment process is essential. I urge SPDC and Renaissance to engage proactively, adhere to regulatory requirements, and work collaboratively with the NUPRC to ensure the successful conclusion of the Shell Divestment.

“Today’s workshop provides us with a platform to engage in constructive dialogue, share insights, and collaboratively assess the capabilities of Renaissance.

“As regulators, we will ensure that this evaluation is conducted with precision and impartiality, with a focus on transparency and accountability,” Komolafe stressed.

In an interview on the sidelines of the event, Komolafe listed the two leading consultants that had been approved to work with the commission as S&P Global, which he said has conducted similar exercises in other jurisdictions as well as Boston Consulting Group (BCG).

Also speaking, the General Manager, SPDC Assets and Deputy Managing Director, Wessel de Haas, stated that the workshop will be used to provide the necessary clarifications to make sure that the regulator can complete its due diligence process.

Earlier, the Executive Secretary of NEITI, Dr Ogbonnaya Orji, at the inaugural quarterly briefing, said the event was meant to get the invited policy makers to provide update or status report on the implementation of NEITI report recommendations as it concerns the agency.

He stated that this is with a view to deepen not just government oversight and reforms in the extractive sector, but make it inclusive of all stakeholders.

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