A vista of opportunities was opened in 2021 after the new Petroleum Industry Act (PIA) came up, starting with the establishment of key regulatory agencies, with the foremost being the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
In this analysis, our reporters explored the setting up of regulatory frameworks by the upstream regulator, achieving 13 of such, barely a year after it was established by the PIA 2021.
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Shortly after constituting the management team of the NUPRC, led by the commission’s chief executive, Gbenga Komolafe, an engineer, the commission began immediately with two core tasks: first was to close the marginal oilfield bid round started in 2020 and next was to create enabling regulations to guide operations in the upstream segment of the petroleum industry.
Daily Trust on Sunday reports that in June this year, the marginal oil fields were successfully closed by the NUPRC as it issued Petroleum Prospecting Licences (PPL) to the bid winners for 57 oilfields bringing them to 87 oilfields issued in the last 23 years.
For the regulations, which are the thrust of this analysis, the regulatory commission set out in the first phase to develop six draft regulations and another seven in the second phase, all in less than one year since the commission was established.
Host community regulations, 5 others open up industry
In April when the NUPRC first convened the stakeholders’ meeting on six draft regulations, it was keen on developing strategies to implement the host community fund and close the marginal field bid round, which it did just two months after the meeting.
At the forum, the Minister of State Petroleum Resources, Chief Timipre Sylva, who chairs the Presidential Steering Committee on the implementation of the PIA, said efforts were on to ensure the commission delivers robust regulations to support the industry.
He said, “The effort of the commission in the preparation of these draft regulations to beat the deadline set by the law for the commencement of the implementation of the PIA is quite commendable.
“I am hopeful that the regulations, when fully implemented, would help in no small measure in the smooth take-off of the day-to-day operations of the NUPRC,” Sylva noted.
Also speaking at the April forum in Abuja, Komolafe said, “This is the first phase of the stakeholder engagements to be conducted by the commission as a regulator. This is deliberately so because we are conscious of prioritising regulations to meet the timelines in the PIA.
“As such, this first phase of the stakeholder’s engagement will capture robust discussions around issues dealing with royalty, licensing rounds, fees and rentals, burning issues on implementation of host community fund in line with section 235 of the PIA, finalising the 2020 bid round through issuance of PPL in line with section 94 (2) of the PIA,” Komolafe had explained.
The regulations, which NUPRC proceeded to develop after the meeting, are the Nigerian Upstream Fee and Rent Regulations, the Petroleum Licensing Round Regulations, the Domestic Gas Delivery Obligations Regulations, the Nigeria Conversion Regulations, the Nigeria Royalty Regulations and the Nigeria Host Community (Commission) Regulations.
NURPC churns out 7 more regulations
And just recently, in September, the NUPRC initiated the second phase of the stakeholders’ consultation on the next batch of upstream petroleum regulations. This time, it consulted on creating seven more regulations, which hitherto were not there to drive the operations.
In this phase, Komolafe, highlighted the seven new regulations coming on stream. They include the Acreage Management (Drilling and Production) Regulations, Upstream Petroleum Environmental Regulations and the Upstream Petroleum Environmental Remediation Fund Regulations. The rest are: Upstream Petroleum Safety Regulations, Utilisation Regulations, Upstream Petroleum Decommissioning and Abandonment Regulations, and the Frontier Exploration Fund Regulation.
He went further to present a scorecard of results from the April stakeholders’ forum on the regulations, stating that the Nigeria Upstream Petroleum Host Community Development Trust regulations had already been gazetted.
Komolafe, who was represented by the executive commissioner, Health, Safety, Environment and Community at the NUPRC, Capt John Tonlagha, said five other regulations had been finalised for gazzetting.
He said, “Inputs of stakeholders from the engagement were incorporated where necessary in the draft regulations. Thereafter, the regulations were forwarded to the Attorney-General of the Federation and Minister of Justice for vetting, legislative standardisation and approval. I am happy to inform you that one of the regulations, the Nigeria Upstream Petroleum Host Community Development Trust Regulations have been gazetted, while the remaining five have been finalised and ready for gazetting.”
Komolafe reiterated the commitment of the commission to creating an enabling environment for growth and investments in the Upstream Oil and Gas industry in Nigeria, which has steered our focus towards working with all the stakeholders.
He highlighted how contributions from the first phase of consultation with the stakeholders had been implemented, as he reemphasized the need for the second phase of consultation with the stakeholders prior to finalising the draft regulations.
He said, “Please permit me to reiterate that the process of formulating the above regulations has been a rigorous and strenuous exercise. They are products of critical thinking and evaluation and hard work by the commission’s regulatory development team and the Presidential Implementation Committee on PIA. However, the process is not complete until the stakeholders’ critical inputs are obtained, discussed and incorporated where necessary in the regulations.
“It is important to note that out of the eight draft regulations being reviewed by the commission, the Host Communities Development Regulations have been duly approved and gazetted.”
The NUPRC boss also said, “The commission will continue to embark on programmes and policies that will create an enabling environment for growth and more investments in the Nigerian upstream oil and gas sector.”
Once a regulation is gazetted it comes into force, as Komolafe added: “The inputs of the stakeholders from the engagement were incorporated where necessary, in the draft regulations. Thereafter, the regulations were forwarded to the Attorney-General of the Federation and Minister of Justice for vetting, legislative standardisation and approval.”
Komolafe said the outstanding five regulations: Royalty Regulations, Domestic Gas Delivery Obligation Regulations, Nigeria Conversion & Renewal (Licence and Lease} Regulations, Petroleum Licensing Round Regulations, and the Upstream Petroleum Fees and Rents Regulations, had been finalised and ready for gazetting.
Stakeholders in the petroleum industry are expected to have the Upstream Petroleum Decommissioning and Abandonment Regulation after it is gazetted this month to guide the setting up of funds for this section in the industry.
“The fund under the Upstream Petroleum Decommissioning and Abandonment Regulations is to be set up within 18 months of the effective date of the PIA, which will be expired by February 2023.”
On the impact of these regulations, the NUPRC head said, “In some instances, the regulations provided for penalties and how contributions would be made in the development of the industry generally; for example, the remediation fund regulation, which enables contributions by companies to be channelled towards remediating the environment. Definitely it will enhance the image of the company and the country at large in the area where they operate.”
With the series of engagement with key stakeholders in the Nigerian oil and gas industry, particularly with the upstream players in the drafting of the post PIA regulations, the NUPRC is bent on steering the industry to a path of growth and increased value addition.
Reforms on track, strong enforcement crucial – Experts
An energy expert who was among the participants, Hassan Abdularahman, an engineer, commended the process of the consultations, noting that it was the first time in years that the inputs of stakeholders became imperative in formulating regulations for the industry.
“This is quite an impressive moment for petroleum industry stakeholders. We are beginning to see the impact of the PIA in just one year, as experts, analysts and host communities are being carried along in these processes. If we had this kind of atmosphere some five years ago, maybe the energy sector would have gone past these,” he said.
Also speaking, Odeh Akor, an engineer and consultant in an offshore logistics firm, lauded the NUPRC for strictly following the implementation of the PIA 2021, but called for strict implementation of the gazette regulations.
“I have seen that the NUPRC means business with the stern decision it took recently in the Mobil/Septal asset acquisition issue; that is what is expected of a regulator. But there is more to it, especially with the Host Community Fund, the Decommissioning and Abandonment Fund, the Environmental Remediation Fund and even the Frontier Exploration Fund regulations.
“These are all sensitive issues having to do with who gets what and how, in terms of funding from the upstream activities. The NUPRC must be prepared to be independent and decisive while enforcing these regulations,” Akor advised.
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