Nigeria’s Road Show at OTC Signals Readiness to Welcome New Investors into Oil and Gas Industry

 Nigeria shone at the recent 2024 Offshore Technology Conference in the United States, where officials of the  Nigerian Upstream Regulatory Commission and the Nigerian National  Petroleum Company Limited  unveiled some far-reaching measures to unlock more investments in the energy sector, reports Emmanuel Addeh

The manner in which foreign and indigenous investors received the news of the licensing round for the 19 oil blocks is a testament that Nigeria is already gaining grounds amid stifled investment in hydrocarbon.

On May 7, 2024, the Nigerian Upstream Regulatory Commission (NUPRC) formally launched the licensing round for 12 new oil blocks and 7 old blocks. Nigeria is a frontrunner in the advocacy for a just energy transition.

If anything strengthens Nigeria’s position, it is the recent regulatory tweak by the NUPRC, the doggedness of the Nigerian National Petroleum Company Limited (NNPCL) to chart a new course for gas as Nigeria’s transition fuel, and the presidential directives on energy.

Two smart moves made by the NUPRC to open up the industry again are the manner it is managing the divestments of some oil majors with a new divestment framework, the 10-year Strategic Plan (2023-2033), and the NUPRC Regulatory Action Plan (RAP) for 2024, designed to attract investment, grow reserves, and increase production.

Meanwhile, the state-owned company, NNPCL has been at the forefront of revolutionising the gas sector development and has ensured the pursuit of critical projects that will put Africa at the feet of Nigeria as Africa’s gas hub.

The two oil kingpins- the NUPRC and the NNPCL took center stage at the 2024 Offshore Technology Conference in Houston, Texas, USA between May 6-9 2024.

The event focused on ‘Sustainable Energy Solutions for Africa’s Future’ and saw major announcements from NUPRC and NNPCL.

The NUPRC listed PPL 300 (continental shelf), PPL 300-CS; PPL 301-CS; PPL 3008; PPL 3009; PPL 2001; PPL 2002; PML 51; PPL 267; PPL 268; PPL 269; PPL 270; and PPL 271 among 19 oil wells that are up for bidding.

The commission’s Chief Executive, Gbenga Komolafe made a mouth-watery offer to investors which includes lowering signature fees for oil blocks and lowering entry bottlenecks.

At the launch, Komolafe also pledged that the 12 acreages would be offered based on a fair, transparent, and competitive bidding process in line with section 73 of the Petroleum Industry Act.

“Our approach is enshrined in the PIA which ensures compliance with best practices to boost investors’ confidence. In keeping with the provisions of PIA, the commission has issued a licensing round guideline and published a licensing round plan for the 12 blocks,” Komolafe told both foreign and indigenous investors.

Also, some IOCs are divesting from 26 oil blocks with combined reserves of 8.211 million barrels of oil, 2,699 million barrels of condensates, 44,110 billion cubic feet of associated gas, and 46,604 billion cubic feet of non-associated gas.

However, the average production from the blocks is 346,290 barrels per day (bpod) even though the technical production potential is much higher – standing at 643,054 barrels.

The NUPRC sees the divestment as an opportunity for competent investors to take up the assets.

The NNPCL’s Executive Vice President, Upstream, Oritsemeyiwa Eyesan, who represented the Group Chief Executive Officer, NNPCL, Mele Kyari announced OB3 gas pipeline will deliver gas from the south to the North by the end of the second quarter.

Eyesan told investors, “(The president) did not waste time to swing into issuing out a presidential order to reduce the contracting cycle time practically to six months, and also to increase the threshold of the Joint Ventures and Production Sharing Contracts operation.

“I know we had in the industry some stalemate with some divestment and discussions. Last year, when we were here, the Mobil divestment and the shell divestment were kind of in slow motion.

“Today, I’m happy to announce that we are at the point of concluding this transaction. And even lastly, the commission Chief Executive, Gbenga Komolafe, summoned the entire industry to a forum where we all presented with two options to fast-track the approval process for the divestment process.

“Now, having said that, I believe also for us in NNPC, we’ve taken the bull by the horn, and we are still fostering, you know, our gas as a transition forum.”

The announcements are major developments that signaled Nigeria’s readiness to do business.

Chevron is one of the big oil majors in Nigeria present at the launch. During the launch of the licensing round for the 19 oil wells, the company’s new Managing Director, Jim Swartz, emphasised Chevrons readiness to take up more oil and gas projects in Nigeria.

The American multinational company believes in the future of hydrocarbon as a transition fuel.

Swartz said, “We are very excited about the potential, we are very excited about what the government has done to put in place a regulation that supports a predictable investment future.

“We are also excited about working with NNPC in developing the future of hydrocarbons. It is so important that we have a competitive predictable environment so we can get returns out.

“We are all looking to invest globally where there is a great opportunity for returns. Significant gas resources of the future can provide globally the resources needed. The oil fits in that perspective as well. The world is going to need that.

“In terms of energy transition… we look at it inform of reliable, affordable and cleaner.”

Aside from foreign investors, indigenous companies are at the top of the interest of the Nigerian government particularly in promoting local content in the industry.

Indigenous companies like Seplat Energy who were at the opening of the licensing rounds also expressed excitement in the investors’ call by the NUPRC.

NUPRC and NNPCL’s assurances during the launch of the bid round also excited Omiti Engineering, an indigenous oil & gas services company based in Lagos.

“With the current leadership of the Nigerian petroleum ministry and the recent directives of the president, I believe NUPRC are properly guided, and their regulations would improve and progress the industry positively,” the company’s Managing Director, Nduka Nwosu.

To further boost investors’ confidence, Nigeria’s Minister of State Petroleum (oil) Heineken Lokpobiri emphasised the government’s desire to grow local content and the presidential order to reduce the contracting cycle time practically to six months.

The Central Bank of Nigeria had ordered banks to hold 50 per cent of sales proceeds of IOCs for a minimum of 90 days, a move which was a bad signal for investors.

But at the launch of the roadshow, Lokpobiri said that the government had reversed the directive because it was not in line with the government’s plan to attract foreign investors.

Lokpobiri said: “As a government, we are here to support the most strategic agency in the oil and gas industry. If the upstream doesn’t succeed, mid-stream and downstream will be a failure.

“We are not playing politics. We are giving the blocks to people who have the wherewithal to undertake the project.”