NCDMB, NNPC, IOCs sign MoU to ramp up oil production
…targets 6 months contract cycle
…as active oil rigs hit 31 in 2023 from 10 in 2022
… Regulatory uncertainty drags upstream expenditure by 77.8% in 8yrs – NUPRC
In a bid to ramp up Nigeria’s crude oil production, the Nigerian Content Development and Monitoring Board (NCDMB), Nigerian National Petroleum Company Limited (NNPCL) and five indigenous oil companies (IOCs) have signed a Memorandum of Understanding (MoU).
Recall that Nigeria recorded a decline in the second quarter of 2023 averaging a daily oil production of 1.22 million barrels per day (mbpd), lower than the daily average production of 1.43mbpd recorded in the same quarter of 2022 by 0.22mbpd and lower than the first quarter of 2023 production volume of 1.51 mbpd by 0.29mbpd.
The Memorandum of Understanding (MoU) cum Service Level Agreement (SLA) with the Nigerian National Petroleum Company Ltd (NNPC Ltd) and five international oil-producing companies was conceptualised by the NCDMB to optimize the contracting cycle in the oil and gas industry and spur the speedy development of new oil and gas projects, contributing to increased oil production and improved national economy.
The agreement was signed by the Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote, while the new Executive Vice President Upstream of the NNPC Ltd, Mr. Oritsemeyiwa A. Eyesan signed on behalf of the national oil company.
Other top industry officials who signed the agreement included the Managing Director of Shell Petroleum Development Company (SPDC) and Country Chair, of Shell Companies in Nigeria (SCiN) Mr. Osagie Okunbor, and the Chairman and Managing Director of ExxonMobil’s affiliates in Nigeria, Mr. Shane Harris. Others included the Director of Joint Ventures for Chevron Nigeria, Mr. Iwueze Cosmas; the Managing Director, Nigerian Agip Oil Company Ltd, Mr. Fabrizio Bloomfied, and the Executive Director, Joint Ventures, Total Exploration and Production Nigeria, Mr. Obi Imemba.
The Executive Secretary stated that the overall goal is to conclude the oil and gas industry’s tendering to contract award processes within six months, affirming his conviction that the target is realistic with all key parties now on board with the execution of the SLA. He expressed delight that NNPC Limited signed up to the MoU, being the senior partner of the joint ventures and concessionaire of the production sharing contracts (PSC) arrangements that govern the operations of the industry.
Wabote recalled that NCDMB first introduced the 15-day Rule to the industry in 2017, when it promised that it would respond within 15 working days to any formal request for approvals in relation to projects execution. He noted that the rule was later formalized with an SLA in May 2017 with Nigeria LNG Ltd pioneering the process and breaking approval records in respect of the NLNG Train7 project.
He added that “the industry found the outcome impressive leading to the Independent Petroleum Producers Group (IPPG) signing the SLA in 2018 and Oil Producers Trade Section (OPTS) thereafter.”
Wabote reaffirmed that NCDMB is a business-enabling regulator, hinting that “this is attested to by our being recognised and awarded as the most efficient amongst the MDAs in 2022 by the Presidential Enabling Business Environment Council (PEBEC).
“We are also rated PLATINUM by the Bureau for Public Service Reforms in recognition of the self-imposed reforms of our processes.”
The NCDMB boss assured the industry that the SLA would not be an exception, adding that the Board would deliver its own part of the deal.
The SLA signed with the Nigeria LNG in 2017 was the first of its kind to be entered between a regulator and another entity in the oil and gas industry. The template was adopted for managing documentation, contracting and expatriate quota applications between the Board and international and local operating companies.
The agreement obligated NLNG to submit to the NCDMB documents like the Quarterly Job Forecast, Nigerian Content Plan, Bidders List, Nigerian Content Evaluation Criteria, Nigerian Content Technical Bid among others, while the Board had to respond on specific timelines. Should the Board fail to respond in accordance with the provisions of the SLA, the company could proceed with its tendering process after informing the Board in writing or email.
…as active oil rigs hit 31 in 2023 from 10 in 2022
Active oil rigs in Nigeria have increased from 10 in 2022 to 31 in August 2023, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has revealed.
Speaking on the sidelines of the ongoing World Petroleum Congress, Calgary, Canada, Chief Executive Officer, Nigerian Upstream Petroleum Regulatory Commission, NUPRC, Gbenga Komolafe said, “On average, Nigeria had seventeen (17) active oil rigs in 2019 representing one of the highest counts in the African continent as at then.
“The average rig count declined to eleven in 2020, seven in 2021, 10 in 2022, but recently grew to as high as 31 by August 2023, a positive signal of new investments trickling into the country.
“The relatively high crude oil prices may have also attributed to the increase in activities in the petroleum upstream sector.
“We also see this as a reflection of investors’ acceptance of the PIA and its effective implementation by the regulator.
“The projected outlook over the next few years looks promising, and as the regulator in the oil and gas upstream sector.”
Regulatory uncertainty drags upstream expenditure by 77.8% in 8yrs
The NUPRC also stated that uncertainties with regulation dragged the upstream sector expenditure by 77.8 per cent in 8yrs.
The Commission Chief Executive who was represented by the Executive Commissioner, Kelechi Ofoegbu said capital expenditure into Nigeria’s upstream sector, dropped by 77.8 per cent to $6 billion in 2022, from $27 billion in 2014, due mainly to regulatory uncertainty.
He noted that the development culminated in the stagnation of the nation’s oil and gas industry.
He said the nation’s Petroleum Industry Act, PIA, has paved the way for the sustainable development of the industry, adding that it has also brought about restructuring, transparency and accountability.
