Nigerian upstream regulator sets to introduce bailout funds for 2020 Marginal Oil Field licence awardees

Oredola Adeola

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has revealed the plan to introduce hydrocarbon production-based lending engagement to assist the 2020 Marginal Field Bid Round licence awardees to source needed capital.

Engr. Gbenga Komolafe, Commission Chief Executive (CCE), NUPRC made this known in a statement on Tuesday, stating that the production lending agreement is meant to help the awardees to commence full field development towards hitting first oil.

The CCE said that the engagement would be between the Commission, Petroleum Production Licence (PPL) Awardees, Exploration and Production (E&P) service providers and Nigerian Banks.

He said, “It is to provide platforms for strategic partnership/alliance between the awardees and the service providers for Well Re-entry and drilling services.

“The arrangement is to be offered on service fee recoverable by the service providers from production to be attached,” the CCE said.

Komolafe further revealed that the Commission had already concluded plans to organise an E&P International Financing Roadshow in Abuja in the coming weeks for financiers, investment bankers, private equities, and multi-lateral institutional investors.

According to CCE, the initiative is to showcase the high-value quick-win opportunities available to investors in the recent PPL awards, the ongoing National Gas Flare Commercialisation Programme, as well as the ongoing Mini-bid awards.

Komolafe also disclosed that the commission had developed a Corporate Governance Framework for upstream petroleum operations, according to him would ease the challenges thrown up by the initial corporate governance issues that arose before the inauguration of the Petroleum Industry Act (2021).

He said, “The framework is currently at an advanced stage of internal review and stakeholders’ 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,” he said.

He said the NUPRC has initiated the revision of the subsisting Extended Well Test (EWT) Guideline to facilitate dynamic data gathering and accelerate the achievement of first oil to enhance early cash flow and speed up the journey to first oil.

This strategy, according to the CCE, had already yielded positive results with 16 companies submitting Field Development Plans (FDP), two already commencing unitisation processes, six re-entries and two having gone through the EWT.

Komolafe also added the Commission was not unmindful of the protracted dispute among some of the awardees triggered by shareholder disagreements and/or misunderstandings.

CCE said, “We are collaboratively engaging the parties and mediating to facilitate early closure and diligent progression toward achieving the expected regulatory milestones, including value creation and hitting first oil.

“Since the award of forty-seven (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 toward the progression of the assets to field development.

“Steps taken include the convocation of Regulatory Induction Programme for PPL awardees to enable them to have the requisite understanding of the statutory protocols from the award to first oil.