In recognition of the funding challenges facing some of the awardees of the 2020 Marginal Field Bid Round licences, the Nigerian Upstream Regulatory Commission (NUPRC) is planning a production based lending engagement that would assist them source capital to commence full field development towards hitting first oil.
According to the commission, the engagement, which is planned to commence soon, will be between the Commission, Petroleum Production Licence (PPL) awardees, Exploration and Production (E&P) service providers and Nigerian banks. NUPRC said that the engagement is to provide platforms for strategic partnership/alliance between the awardees and the service providers for well re-entry and drilling services, and would be offered on service fee recoverable by the service providers from production to be attached.
NUPRC’s Chief Executive, Engr. Gbenga Komolafe said in Abuja on Tuesday that the commission has already concluded plans to organise an E&P international financing road show in Abuja for financiers, investment bankers, private equities, and multi-lateral institutional investors. The initiative, he explained, 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.
He further said: “To ease the challenges thrown up by the initial corporate governance issues that arose before the inauguration of the Petroleum Industry Act (2021), the commission has developed a corporate governance framework for upstream petroleum operations. The framework is currently at an advanced stage of internal review and stakeholder 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.
“To facilitate dynamic data gathering and accelerate the achievement of ‘first oil’, the commission initiated the revision of the subsisting Extended Well Test guideline to enhance early cash flow and speed up the journey to first oil. The strategy has already yielded positive results with 16 companies submitting Field Development Plan, two already commencing unitisation processes, six re-entries and two having gone through the EWT”.
Komolafe said that the commission is not unmindful of the protracted dispute amongst some of the awardees, which was triggered by shareholder disagreements and/or misunderstanding. He said that NUPRC is collaboratively engaging the parties and mediating to facilitate early closure and diligent progression towards achieving the expected regulatory milestones, including value creation and hitting first oil.
Since the award of 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 towards the progression of the assets to field development.
Steps taken include the convocation of regulatory induction programme for PPL awardees to enable them have the requisite understanding of the statutory protocols from the award to first oil; and a week-long tripartite engagement in Lagos for all awardees and initial asset owners last December 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.
Areas that were presented and rigorously deliberated upon include 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.
