How investment can be attracted into the oil & gas industry for economic devt – Lokpobiri

PAVILION OPENING: From left; Minister of State for Petroleum Resources, Oil, Mr Heineken Lokpobiri; Mr Gbenga Komolafe, Commission Chief Executive, Nigerian Upstream Petroleum Regulatory Commission, NUPRC; Business Development Relations/Strategy, Lee Engineering & Construction Company Ltd., Engr. Ozah Onosetale (on mic); Director, Business Development and Relations, Houston Office, Dr. Gbenga Coker and Group Human Resources Manager, Mr. Olusina David, during the opening of Lee Engineering Group pavilion at the ongoing 2024 Offshore Technology Conference, OTC, in Houston, Texas.

Ilenre Irele

The Federal Government, yesterday expressed readiness to stimulate necessary environment that will in ensure massive investment in the oil and gas industry as it remains key driver to the country’s economy development.
This comes as bottlenecks like signature bonus requirement hindering investment and investors in the sector has been removed.
Minister of State for Petroleum Resources, Oil, Mr Heineken Lokpobiri, made this known to journalists on the sidelines of the ongoing 2024 Offshore Technology Conference, OTC, in Houston, Texas.

Signature Bonus is a single, non-recoverable lump sum payment by the license holder to the government upon the granting of a petroleum exploration license.
He assured investors that oil would remain relevant for a long time and that the government was creating an enabling environment that would attract the best of investment to the country.
He urged investors to take the opportunity of the oil bid round to make investment.
“Historically, no source of energy goes away. So, do not be deceived that fossil fuel will go away. Discuss at the recent global conferences have further proved that fossil fuel will continue to remain, the quicker we extract our oil, the better for us as a country.
“We are here at OTC to show the rest of the world that Nigeria is different and our government is different, in creating the best regulatory framework, allowing competitiveness, and removing all the investment barriers.
“Today, we are restoring investment confidence in the sector and ensuring that investors can bring in their funds without worries. This will show to the world that Nigeria is ready for business.”
The Minister, however, announced the abolition of signature bonus payment to the government by new investors in the oil and gas sector.
According to the minister, over the years, the payment of signature bonuses remains a huge bottleneck for investors aswell as investment into the sector.
“Stakeholders had explained that globally, payable signature bonus by awardees of an oil bloc or marginal field rank highest in Nigeria. On many occasions, the huge amount involved in payment of signature bonus was a setback for investors.”
He said that to ensure investors had a soft landing, such payments would now be tied to immediate exploration and production activities by the new entrants.
“Rather than pay such monies into the coffers of the federal government, the investor must now be able to prove to us that they have the funds required to move into exploration.
“What we have resolved going forward and with 2024 oil bid round is to see that fields won in a bid round must be put into immediate use as against what obtained in past where fields are left idle after assets are won.”
He said the new strategy would ensure the creation of jobs and boost activities in the upstream oil sector.
Recall that In 2022, the NUPRC disclosed that it realised a sum of N174 billion from the signature bonuses paid by the awardees for the 2020 marginal oil fields, while it revoked marginal oil fields awarded to 33 companies for failing to meet the 45 days deadline required to pay the signature bonus for the fields. 57 fields were on offer with 665 companies indicating interest to acquire them.
Speaking also, Executive Chairman Lee Engineering and. Construction Company Chief (Dr) Leemon Ikpea, has assured of readiness of the indigenous companies to take over assets of divested International Oil Companies, IOCs.
According to him, “I can rightly assure Nigerians that Indigenous companies have the capacity and are ready to double the investment of these divested assets.
“What is important for us is collaborations aswell to bridge the gap. Great minds and not portfolio investors are spanning from indigenous operators and you will be surprise at what they can pull up and grow these investment.
“Indeed, following the federal government of Nigeria’s commitment to the Nigerian Local Content Act, which seeks to promote indigenous technological capabilities in the oil and gas sector, Lee Engineering is currently building a gigantic, next-generation production facility in Warri, Delta State, Nigeria and to be commissioned soon. The facility has an installed capacity to manufacture high volume industry equipment such as pressure vessels, heat exchangers, process skids, tanks and other oil and gas tools that would help transform the industry. The investment in the gigantic fabrication facility is estimated to be to be worth over 200 million dollars.
“However, there is need for the continuous government support and incentives to drive these needed objective for indigenous operators which would in return discourage capital flight and strengthen the country’s currency for profitability and economy recovery.”

Similarly, the Commission Chief Executive, Nigerian Upstream Petroleum Regulatory Commission, NUPRC, Engr. Gbenga Komolafe, said the recent Presidential Executive Orders issued in March this year, were aimed at improving the efficiency and attractiveness of Nigeria’s oil and gas sector, adding that it would culminate in further increasing the nation’s oil and gas reserves, currently standing at 37.5 Billion barrels of Crude Oil and Condensate Reserves and 209.26 Trillion Cubic Feet of Natural Gas Reserves.

According to him, “The exercise, which was initially announced on the 29th of April 2024, is a significant leap in our strategic hydrocarbons development initiative. This round introduces twelve meticulously selected blocks across diverse geological spectra from the fertile onshore basins to the promising continental shelves and the untapped depths of our deep offshore territories. Each block has been chosen for its potential to bolster our national reserves and stimulate economic vitality.

“Our approach is underpinned by the robust legal framework of the Petroleum Industry Act 2021(PIA), which ensures compliance with best practices to boost investors’ confidence. In keeping with the provisions of the PIA and regulations made under the Act, the Commission has issued a licensing round guideline and published a licensing round plan for the twelve blocks (namely 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).

“In addition to these blocks, the seven deep offshore blocks from the 2022 Mini-Bid Round Exercise which cover an area of approximately 6,700 km2 in water depths of 1,150m to 3,100m shall also be concluded along with this Licensing round.

“To ensure the seamlessness of the Licensing Round exercise, the NUPRC, in collaboration with our National Data Repository and multi-client partners, guarantees access to comprehensive and high-quality geological data, facilitating informed decision-making and strategic investments. The blocks on offer have extensive 2D and 3D seismic data coverage, including multi-beam and analog data. Additionally, a 3D reprocessed Pre-stack Time Migration of remarkable quality is also available to prospective bidders.

“The availability of advanced seismic datasets and analytical tools via our dedicated portals exemplifies our commitment to excellence and technological advancement. Distinguished Investors and Industry Captains and Stakeholders, the Licencing Round is indeed expected to be a huge success for Nigeria and is a big step towards growing the nation’s oil and gas reserves through aggressive exploration and development efforts, boosting production, expanding opportunities for gas utilisation and end to end development across the value chain, strengthening energy security and economy, providing an occasion to gainfully engage the pool of competent companies in the oil & gas sector with a multiplier effect in employment opportunities, enabling the transfer of technology, valorizing petroleum assets in the Nigerian Territory and attracting investments. In addition, the Licencing Round presents us with the opportunity to reinforce Nigeria’s commitment to openness and transparency in line with the principles of the Extractive Industry Transparency Initiative (EITI).

“On the global scale, the Licensing Round will no doubt be beneficial to all stakeholders and will in the long run contribute to long-term global energy sufficiency. Interestingly, the Licensing Round process was formulated in cognizance of global energy sustainability goals.”