May 30, 2024

NUPRC ratchets up oil asset divestment, ready to boost Nigeria’s daily production by 700,000 barrels

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Adewale Akintaro

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is working round the clock to ratchet up the conclusion of regulatory oversight on the ongoing oil assets divestment by International Oil Companies (IOCs), sources told EnergyDay.

With the process in the thick of conclusion, this medium learnt that when concluded, Nigeria would add at least 700,000 barrels per day to its current daily production volume, to hit about 2 million bpd before the end of the year.

Recall that a larger chunk of the new investors, mostly indigenous businessmen, that are taking over the multi-billion dollar facilities, have already positioned to take over fully, but had been delayed, in a bid to ensure strict adherence to the rules as provided by the Petroleum Industry Act (PIA).

The NUPRC also harps on the necessity for all interested parties to the Joint Ventures (JV) must amicably resolve their differences before it can perform its regulatory function as provided by the new law.

Sources confided in EnergyDay that the investors are ready to pump the needed funding into some of the assets that had been left without adequate investment in the last few years as the IOCs plan to exit onshore oil as well as align with the international pressure to reduce the funding for fossil fuels.

“The NUPRC, under Mr Gbenga Komolafe is speeding up approvals and plans to increase oil production by divesting IOCs and increase oil production by as much as 700,000 bpd when these processes are concluded,” a source in the know of the goings-on within the oil and gas industry said.

In February 2022, Seplat Energy announced its acquisition of oil and gas assets belonging to Mobil Oil Producing Nigeria Unlimited (MPNU), in a deal seen as the first since the signing of the PIA by then President Muhammadu Buhari in August 2021.

Shell stated that with the deal, its onshore subsidiary, the Shell Petroleum Development Company of Nigeria (SPDC), will now be operated by ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, a Swiss firm.

However, Shell stated that the completion of the deal was still subject to approval by the federal government. During the week, the NUPRC commenced an assessment of the deal by both parties by holding a workshop on the matter in Abuja.

Shell disclosed that it was divesting SPDC for $1.3 billion and expected to receive additional payments of as much as $1.1 billion. This would total N2.4 billion.

Aside the aforementioned multinationals, French energy giant TotalEnergies is also seeking to sell its minority share in major Nigerian onshore oil joint ventures, its chief executive, Patrick Pouyanne, announced this year.

“Fundamentally it’s because producing this oil in the Niger delta is not in line with our (Health, Safety and Environmental) policies, it’s a real difficulty,” he added.

The French group, checks showed, produced a total of 219,000 barrels of oil equivalent per day in 2023 in Nigeria and remains a major operator of offshore fields in the West African country.

But despite the speculations about Chevron’s planned divestment, the IOC has increased the Usan and Agbami oilfield leases till 2042. It has also increased its investment emphasis on short-cycle projects.

Chevron operates the Agbami Field, which lies 70 miles (113 km) off the coast of the central Niger Delta region and spans 45,000 acres (182 sq. km).

According to the reliable source, to accelerate the process, the NUPRC has also given the participating companies, two options to either hold on until the ongoing audits are concluded before the consummation of the process or move ahead pending when the review is completed.

However, the IOCs and the buying parties would have to accept the outcome of the ongoing audit wholesale if they decide to proceed without the final report being published.

“Each of those companies will be given an option to have a fast-track process and get immediate approval or await the audits. And if there’s an audit, they are going to play according to the audits.

“The audits have certain pillars of regulation and the pillars of regulation include host communities, include statutory taxes, include remediation, and recovery, among others.

“But host communities are key, because they will want host companies to be happy. So if they want immediately, they will sign up to accept whatever the audit results are or they will wait for the audit findings.

“The commission is pushing our production beyond 2 million barrels a day before the end of December with this new move,” the official who declined to be named told newsmen.

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