NUPRC Parleys IOCs in Quest to Raise Gas Production by 20%

•Independent producers harp on using gas to tackle Nigeria’s energy poverty, underdevelopment

Peter Uzoho

In a bid to realise its mandate of creating an enabling environment that would lead to increasing Nigeria’s gas production by 20 per cent within this decade and by 50 per cent next decade, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) said it had started engaging international oil companies (IOCs).

Relatedly, Nigerian indigenous independent oil and gas producers have stressed the need for the country to use its abundant gas resources to tackle its perennial energy poverty and underdevelopment.

The trio of NUPRC’s Commissioner, Exploration and Acreage Management, Ms. Rose Ndong; Director, New Energies, Seplat Energy; Mr. Effiong Okon; and  Managing Director of First Exploration and Petroleum Development Company, Mr. Ademola Adeyemi-Bero, made the assertions at the Pre-conference workshop hosted in Lagos by the Nigerian Association of Petroleum Explorationists (NAPE).

Ndong observed that Nigeria has proven gas reserves of about 208 trillion cubic feet (tcf) of natural gas with over 600tcf of unproven reserves, adding that currently, the nation produces about eight billion standard cubic feet of gas per day.

“Currently, Nigeria produces about eight billion standard cubic feet of gas per day, out of which approximately about 20 per cent is delivered to domestic markets. One of the speakers actually said 40 per cent is exported to international markets and about 30 per cent utilised for producers’ internal consumption.

“We are currently on track to increase our gas reserves by 20 per cent within the decade and by 50 per cent next decade. Based on the provisions of the Petroleum Industry Act (PIA), the commission has issued the annual domestic gas delivery obligation to operators.

“This allows the commission to drive gas production costs as operators are made to balance export appetite with the increasing domestic supply of gas,” she said.

She explained that the commission was implementing   a number of initiatives to increase gas production and utilisation, saying one of them was the commencement of mandatory conduct of gas well deliverability test for all gas producers to establish operating limits.

This, Ndong stressed, enables the commission to determine production potential and to guide the industry towards its optimal capacity.

The NUPRC commissioner stated that the agency was in constant engagement with operators on the need to drill below the conventional oil to target the gas reach zones for production and to increase the nation’s gas reserves.

“Also, we’re staring operators with saturated reservoirs to ensure their well placements drive optimal exploitation of oil and gas resources.

“We in the commission are actually currently engaging with most of the IOCs. We target to speak to all of them to just interact and know what the problems are, how can the regulator help them to increase their production in terms of gas, especially since we’re looking at gas as a transition fuel.

“So these interactions are ongoing. If we don’t know what the problems are, what the operators are facing, as regulators, we might not be able to know what to do towards helping to make things work for them,” Ndong stated. 

She further said NUPRC was also implementing the provisions of PIA 2021 on gas flare elimination and commercialisation as a means of unlocking more gas availability to the market.

She pointed out that under that provision, companies were made to commit to the robust plan that eliminates gas flaring by bringing them to the market.

She said the commission was also helping at storage facilities development projects as a tool to incentivising gas production projects from the upstream sector to meet midstream and downstream demands.

She added that enforcement of regulatory compliance with approved associated gas development solution in all applicable gas well development was ongoing.

Assuring that these discussions would be ongoing, Ndong told the audience that the doors of the commission and that of its downstream counterpart, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) were open to receive complaints and inputs from the operators on the way forward.

Ndong added, “If we don’t interact with you operators, we might not know the real problems. The fact that we are regulators does not mean that we don’t have your experiences out there in the field. But we have a strong regulatory policy that’s in place and it’s willing to work with you towards making sure that we achieve the goals and targets that have been set.

“So to achieve the above, we no doubt need investments to fund the projects that will see in Nigeria and attain energy security and economic growth. And I can assure you that we, at the commission, empowered by the PIA, are working assiduously to see that we have all stakeholders involved to ensure seamless operations as we gradually roll out the key policy initiatives necessitated by the PIA.”

Declaring that “Nigeria is fully ready to ensure further exploration and development of its gas resources”, she said the agency was unwavering in delivering on this mandate with the support of the industry operators and stakeholders.

“We can’t stop. So with your support, we will be able to achieve our mandates as regulators while we help you to work with you to achieve your own mandates as operators.

“I would like to reiterate that the government is open for business and we call on everyone to come to the table as we are doing now and as we continue to do to discuss strategies and proffer solutions for realising the full potential of Nigeria’s gas reserves to ensure economic prosperity for Nigeria”, Ndong further said. 

In his presentation, Okon, who dissected the issue of energy security and transition strategies as well as the opportunities and challenges of energy transition in Nigeria, stressed the need for the country to use its huge gas resources to tackle the perennial energy poverty and under elopement in the country.

He said concerted efforts must be made to provide universal access to electricity and clean cooking devices in the country.

Despite the global debate on the acceptability of gas as a lower-carbon fuel for energy transition, Okon argued that for developing countries like Nigeria, gas remains the bridge to sustainability.

He recalled that at the Climate Change Conference of the Parties (COP 26) meeting last year in Glasgow, Scotland, Nigeria had made a commitment for net-zero carbon emissions by 2060 contingent on the use of gas till at least 2040.

Additionally, he observed that the newly-passed PIA promotes new investment in gas development and distribution to drive economic growth and electrification.

The Seplat director noted that Climate Action tracker showed that based on Nigeria’s contribution to carbon emissions and its current policies and actions, it was 1.50C Paris Agreement compliant.

“In Africa, increase in investments are driven by the power sector with total share of energy investment increasing from one-third to >50 per cent. Financing costs also rise due to growing public debt and increased investment risks.

“International lenders and investors will need to continue to play a critical role in financing the development of gas as Nigeria’s transition fuel and this will require a more balanced approach to funding oil and gas versus renewable energy,” Okon stated.

Also speaking at the event, Adeyemi-Bero, who is the immediate-past Chairman of the Independent Petroleum Producers Group (IPPG), said to boosts Nigeria’s oil and gas production, greater attention must be paid to human capacity development and technological know-how in the industry.

He added that there must be fiscal stability, incentives for investors as well as clear and enabling regulatory framework and critical infrastructure development, pointing out that such infrastructure included pipelines, Liquefied Natural Gas (LNG) export  and receiving facilities, and low carbon emission technology advancement.

He further advocated that there must be focus on solving electricity access and clean cooking deficit in Nigeria and Sub-Saharan Africa among others.