NUPRC Announces Addition of 1.087bn Barrels to Nigeria’s Crude Oil Reserves, 2.573 TCF to Gas Stock

•Oil reserves to last 68.01 years, gas 97.99 years

•Nigeria now holds 33% of Africa’s total gas deposits

•Commission sets new guidelines for domestic crude obligations to local refineries

Emmanuel Addeh in Abuja

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) yesterday formally announced a rise in Nigeria’s hydrocarbons’ reserves as of January 1, 2024, with the country’s stock of crude oil jumping by 1.087 billion barrels and its gas reserves surging by as much as 2.573 Trillion Cubit Feet (TCF).

In line with the NUPRC’s statutory declaration, Nigeria now boasts 37.5 billion crude oil reserves, while its total gas resources as of the beginning of this year, now stands at 209.26 TCF.

Making the declaration yesterday in Abuja during the event it tagged: “National Annual Petroleum Reserves Position as of 1st January 2024 and Template for Domestic Crude Oil Supply Obligation Guidelines”, the Chief Executive of the NUPRC, Mr. Gbenga Komolafe, explained that the reserves life index also stands at 68.01 years and 97.99 years for oil and gas respectively.

A breakdown of the data showed that crude oil and condensate reserves currently stand at 31.56 billion barrels and 5.94 billion barrels respectively, to hit 37.50 billion barrels.

Also, associated gas and non-associated gas reserves stand at 102.59 TCF and 106.67 TCF respectively, resulting in total gas reserves of 209.26 TCF, according to the upstream regulator.

Only Libya with over 48 billion oil reserves tops Nigeria in Africa, while Nigeria is the clear leader in ownership of gas stock, holding over 33 per cent of the entire continent’s reserves.

Speaking further, Komolafe stated that consistent with President Bola Tinubu’s policy initiatives, the NUPRC had been working towards improving the sector’s performance, enhancing the growth of the country’s oil and gas reserves and ensuring stable production.

According to him, the significance of the event was to show the capacity of the country in terms of  the abundance  of hydrocarbons that had been proven.

Komolafe, explained that most of the new addition to the reserves were from brownfields, especially recent production from fields owned by the last marginal fields awardees.

“Again, that is salutary to the various initiatives of the commission, and the fact that of course some of the brownfields through the marginal field awards, have started producing and contributing to our national oil and gas reserve.

“In furtherance of the provisions of Chapter 1, Part III, Section 7 (g), (i), (j), (k), (m), (q), (r)  and other powers enabling me in this respect, I declare the total oil and condensate reserves of 37.50 billion barrels and total gas reserves of 209.26 TCF as the official national petroleum reserves position as of January 1, 2024,” Komolafe stated.

With his recent executive orders, the commission’s chief executive said President Bola Tinubu has shown determination towards removing obstacles to investments in Nigeria, improving the investment climate, positioning Nigeria as the preferred investment destination for the oil and gas sector in Africa and diversifying the economy for the benefit of all Nigerians

The NUPRC, as the industry regulator, he said, was committed to improving the country’s oil and gas reserves as well as the successful completion of all strategic initiatives that would enhance the sector’s productivity including the Nigerian Gas Flare Commercialisation Plan (NGFCP).

According to him, the NGFCP would drive the attainment of Nigeria’s pledge to end routine gas flaring within this decade and contribute to the reduction of global emissions, and the Domestic Crude Oil Supply Obligation (DCSO), to meet demands of local refineries.

Although Nigeria has large reserves of fossil fuels, however, getting the natural resources out of the ground has been a major problem. For almost four years, Nigeria has failed to meet its Organisation of Petroleum Exporting Countries (OPEC) quota. This is despite the slashing of the allocation from over 1.7 million bpd to 1.5 million bpd this year.

The country has consistently blamed massive oil theft, outright vandalism, decreasing investment in the sector, among others, for its inability to take advantage of the God-given resources.

Also in compliance with the provisions of Section 109(2) of the Petroleum Industry Act (PIA), 2021, the NUPRC in what it termed a landmark move, at the event, unveiled a template guiding the activities for domestic crude oil supply obligation.

It said the new temple was developed in conjunction with relevant stakeholders from NNPC Upstream Investment Management Services (NUIMS), representatives of Crude Oil/Condensate Producers, Crude Oil Refinery Owners Association of Nigeria (CORAN) and Dangote Petroleum Refinery.

There has been some friction between oil producers and refineries’ owners who complain that the producers failed to supply them feedstock in consonance with the DCSO regulation.

However, Komolafe stated that the new template has the buy-in of all, in a bid to foster a seamless implementation of the domestic crude obligation and ensure consistent supply of crude oil to domestic refineries.

With the development, the NUPRC chief executive assured that the second half of 2024, was poised to witness increased synergy between local refineries and producing companies, setting the stage for a more robust and self-reliant petroleum landscape in Nigeria.

Under the procedure for domestic crude oil requirement allocation, the NUPRC stated that all allocated DCSO volumes shall be fully discharged into the refinery it is meant for and fully utilised for domestic refining.

On the currency of payment for DCSO transactions, it said: “The payment shall be in either United States Dollar or Naira or both.  Where the payment is in both currencies, the payment split shall be as agreed in the Sales and Purchase Agreement (SPA) between the producer and the refiner.”

It added: “Where a lessee enters a long-term supply contract with the refiner in fulfilment of his domestic crude oil supply obligation, the obligation to sell crude to the refiner by the lessee is reliant upon the refinery being in operation.

“All DCSO allocated cargoes must be discharged into the refinery facility they are programmed for and shall not be diverted or swapped.

“Utilisation of any DCSO allocation by any refiner for any purpose other than domestic processing, without a written approval by the commission shall attract suspension from DCSO allocation for a period determined by the commission in addition to any other administrative penalty that may be imposed by the commission”

By the new rules, in the occurrence of a default in payment by the refiner, the commission said it shall not allocate DCSO to the defaulter for a period to be determined by it, in addition to the penalty contained in the sales agreement between the refiner and the lessee.

“The following penalties shall apply to any refiner that fail to offtake the allocated DCSO (except in the event of force majeure as defined in the SPA), in addition to any other agreed penalty in the SPA between the Lessee and the refiner:

“For pipeline, barging or trucking deliveries, take or pay conditions shall apply.  For marine deliveries, the lessee shall sell the parcel of the crude oil as a distressed cargo and the defaulting refiner shall be liable for liquidated damages as provided in the SPA

“Where the lessee fails to supply the allocated DCSO resulting in shortages for the refinery (except in the event of force majeure as defined in the SPA), the defaulting lessee will be liable to administrative penalty to be determined and imposed by the commission,” the NUPRC stated.

The commission had a few weeks ago conveyed a meeting of stakeholders, following complaints by local refineries owners, after it said it noticed some challenges hindering the seamless implementation of the DCSO provision.

According to Komolafe, the commission needed to step in to resolve the challenge and later set up a committee to look at the issues, noting that it was mainly caused by the absence of a clear rule of engagement.