NUPRC denies awarding marginal oil fields licenses to unqualified companies, NEITI clarifies report 

Oredola Adeola

The Nigerian Upstream Regulatory Commission (NUPRC) has refuted allegations that it awarded the 2020 Marginal Oil Fields licenses to unqualified companies, asserting that all the successful license holders in the last bid round were fully qualified and paid their signature bonuses before receiving the awards.

This denial comes in response to a recent report by a national newspaper, which cited the Nigeria Extractive Industries Transparency Initiative (NEITI) 2021 Oil and Gas Industry Report, stating that the Upstream Regulator awarded marginal fields to some companies before the payment of signature bonuses by the firms.

The report also quoted the NEITI report as stating that the NUPRC accepted payment of signature bonuses from companies that did not participate in the marginal fields award process.

Engr. Gbenga Komolafe-led NUPRC in a statement released on Wednesday in response to the allegation revealed claimed that the report was incorrect and a misrepresentation of both the process and outcome of the 2020 marginal field award exercise.

The NUPRC emphasised that the 2020 marginal oil and gas fields bid exercise was commenced by the now-defunct Department of Petroleum Resources following the Presidential approval obtained by the department to conduct the exercise.

NUPRC expressed concern that the NEITI could be associated with such a wrong narrative, stressing that it reached out to the agency which promptly disclaimed the newspaper report, insisting that the report by the newspaper did not reflect the position in the said report.

It said, “The bid exercise was launched on June 1, 2020, and a total of 57 marginal fields were made available for bidding through a transparent online electronic bidding system.

“Of the total number of companies that indicated interest in the bid exercise by submitting their applications within the deadline set for submission of applications, 540 companies were pre-qualified in line with the procedure set out in the bid guidelines.

“Ultimately, 482 companies out of the 540 companies pre-qualified submitted bids for the various fields on offer.”

The regulatory authority therefore noted that at the end of the exercise and in line with existing government policy to encourage as many qualified Nigerian companies to participate in the upstream business, 161 entities from the 482 companies that submitted bids were offered marginal fields and given a deadline to make signature bonus payments.

“A number of these entities were offered fields on a joint basis with others.

“The commission upon inception had to embark on extensive stakeholder engagements with the successful bidders to resolve the many issues arising from the policy of jointly awarding some of the fields to several awardees,” NUPRC stated.

On the signature bonus, the commission stated that a number of the entities that were offered fields in the exercise were unable to fulfill their award obligation to pay the signature bonus within the time frame specified for the payment of the bonuses.

“Hence, the commission sought and obtained the approval of Mr. President to re-award the interest not paid to other entities who participated in the bid exercise but who were not offered any fields during the initial stage of offering the awards.

“These later awards were premised on the condition that those companies present clear evidence of both financial and technical capability. At the end of the entire exercise, a total of 55 fields were successfully awarded and paid for.

“The provisional award letters issued to qualified bidders (which contains the terms and conditions of the award, including the signature bonus payable), in all cases, and final letters of the award were only issued upon payment of 100 percent of the signature bonus by or on behalf of the awardee,” NUPRC stated.

NUPRC therefore observed that as a regulatory body governed by laws under the Petroleum Industry Act (PIA) of 2021, it neither awarded marginal fields to entities that did not participate in the 2020 marginal bid round nor awarded a field to any company that did not meet the obligation of paying the statutory signature bonus.

The Nigeria Extractive Industries Transparency Initiative clarifying its position on the 2020 marginal fields awards stated that it was quoted out of context.

NEITI said, “The 2020 marginal field bid exercise was commenced by the now-defunct Department of Petroleum Resources and not the NUPRC and its current management team.

“From our records, the bid exercise for the marginal field was launched on June 1, 2020, while the NUPRC was set up in August 2021 and the management team of the commission was appointed about September/October same year.

“NEITI, therefore, would rely on its ongoing 2022/23 Oil and Gas Industry Reports to ascertain in detail and with evidence how the exercise was fully conducted and finalised,” NEITI stated in a response to media inquiries.

NEITI further disclosed that its next oil/gas industry report covering the period in question should be ready in 2024, therefore, absolving the NUPRC of any blame.

EnergyDay’s check on the latest NEITI 2021 Oil and Gas Industry Report, stated that the upstream regulator of the oil sector accepted payment of signature bonuses by companies that did not participate in the marginal fields award process.

The latest NEITI report disclosed that in June 2020, a marginal field bid process involving 57 fields was announced under the guidelines set by the NUPRC (then Department of Petroleum Resources).

NEITI 2021 oil sector report provided information about the process since it had been concluded.

The report said, “According to NUPRC, there were 665 applicants for the 2020 Marginal Field bid round. A total of 106 companies emerged from the process as the marginal field bid round awardees.

“It should, however, be noted that only five companies had made payment of signature bonus based on 2021 audit information provided by NUPRC.

“According to the commission’s regulation, all successful applicants whose names are in the Notice of Preferred Bidder Status ought to have made payment of signature bonus, before award.

“It should be noted that four other companies whose names were not on the list of awardees paid signature bonuses on the 2020/2021 marginal fields award,” NEITI stated.