NUPRC Rallies Indigenous Oil Producers on Alternative Financing of Oil Exploration, Production Activities

Peter Uzoho

In response to the funding challenge in the oil and gas industry, exacerbated by energy transition, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is collaborating with indigenous operators on the platform of Independent Petroleum Producers Group (IPPG) to look at alternative ways of getting funds to accelerate hydrocarbon exploration and production in the country.

The Chief Executive Officer of NUPRC, Mr. Gbenga Komolafe, called for the collaboration for alternative financing, Friday in Lagos, when he hosted the leadership and members of IPPG as part of his ongoing engagement with critical stakeholders in the Nigerian oil and gas industry.

Members of IPPG at the meeting held at the National Oil and Gas Excellence Centre, an annex of the commission, included IPPG Chairman and Chairman of Waltersmith Petroman Oil Limited, Mr. Abdulrazaq Isa; Chief Executive Office, Frontier Oil, Mr. Dada Thomas; Chief Executive Officer, Energia Limited, Mr. Chidi Egenonu; and Group Managing Director, Amni Petroleum, Mr. Wale Olafisan; amongst others.

Komolafe, who said he understood the challenges faced by the indigenous operators, noted that the industry generally, was facing a critical challenge including access to finance.

He said the world was now in energy transition regime, adding that the outcome of the ongoing discussions at the United Nations Convention on Climate Change (COP26) in Glasgow, Scotland, would impact financing in oil and gas industry negatively, hence the need for the commission and the indigenous operators to think outside the box on funding.

He said despite the energy transition threats, Nigeria would not abandon its God-given hydrocarbon resources, urging the IPPG to work with the commission to pursue international financing groups that would commit to funding critical upstream projects in the industry.

Komolafe said, “We will not abandon hydrocarbon- our God-given resources, because of energy transition.

“We really need to think out of the box. And as you depart, I want us to come back to the table, let us see how we can actually get, maybe, international financing group to commit to financing critical projects in our upstream.

“So, I want us to look at this. Because I understand that financing is a critical issue posed by the energy transition. But I know that if we sit down and think together, we will overcome.”

He said the the Petroleum Industry Act (PIA) has not only made the commission a conventional technical regulator, but now a commercial regulator and business enabler.

He said the commission would operate with a different regulatory culture as prescribed by the PIA, reiterating that the law has made the commission both a technical and commercial regulator.

In that wise, Komolafe said the commission would equally be concerned about how it facilitates financing for members of IPPG.

He said ideas coming out of such collaboration could lead to getting finance that would empower the indigenous firms to be able to leverage on the divestment of the international oil companies (IOCs) and enhance their capacity in the onshore and shallow water operations.

He added, “So, we are going to do this together. We are not going to do it in isolation of your members. So, Mr. Chairman (Isa), I’m placing this before you for your members to come up with ideas that can equally be facilitated by the regulator.

“If you could put in place an initiative, being triggered and spearheaded by the regulator in terms of attracting financing for your members, that will empower your members to be able to leverage on the divestment by the IOCs for them to enhance their capacity in the onshore and shallow water aspect of the investment in the upstream.

“So, all these I urge your members to look at as a way that we can optimise the production in the upstream, and thereby enhancing the federation’s revenue.”

Responding to the issue of crude oil theft raised by the Chairman of IPPG and its impact on the operators, Komolafe said crude theft has been a topical issue, assuring his visitors that government was doing a lot to address that through a number of initiatives.

He said the country was losing a lot due to crude oil theft and that the situation was giving government much worry and concern.

“You touched on the issue of crude oil theft in the industry. That’s very topical. Let me assure your members that I know that government is doing quite a lot, government is very conscious of that.

“At the moment, we are losing a lot to crude oil theft. So, government is really worried and concerned about that issue. And I know that a number of initiatives are going on. So, I want to assure your members that government is doing a lot to address all these challenges. I will also be soliciting the support of your members for us to jointly work as a team to address some of the challenges”, he said.

Also, reacting to the concerns raised by the IPPG on the 2020 marginal fields award, Komolafe said the commission was conscious of some of the challenges faced by them, noting that the regulator would learn from the last experience, assuring that improvement will be made in the process going forward.

He said the presentation and inputs made by the indigenous operators would form part of the commission’s working document for policy formulation in implementation of the PIA.

He added, “The issues you raised in your presentation will be very useful in our policy formulation and implementation. I know you raised quite a number of issues and as we go back as a commission, we will take a look at each and every issue and challenge you raised.

“From there, we shall get a position paper to government. The ones we can quickly address within the purview of the regulator, we will do that. The ones that need high level approval, we will definitely escalate that and ensure that we get approval for that.

“I’ve listened to you and you have made very critical inputs. So, we will go back with that. At least, it will help us in designing our regulatory policies and procedures to ensure that we jointly achieve efficiency and cost effectiveness in the operations in the upstream sector.”