In a bid to increase oil production and revenue in Nigeria, the federal government through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has Officially Issued Petroleum Prospecting Licenses (PPL) to Marginal Field Awardees. This award gives licenses to the successful applicants to develop marginal oil fields in Nigeria. Similarly, the federal has also issued 49 out of the 57 petroleum prospecting licenses to marginal oil field developers. The road to this award started two years ago, when the federal government through the defunct Department for Petroleum Resources (DPR) put up 57 onshore, swamp, and shallow offshore terrains fields for bidding. Out of the 161 companies short-listed for the final stage, 33 of the shortlisted awardees failed to make payment within the specified 45 days window having failed the technical and financial capacity to develop the fields up to first oil and pay between $5 million and $20 million signature bonus within the given period.  The delay and outright inability of some winners of the oil field to comply with the provisions, compounded by multiple court cases which restrained the FG from offering licenses to winners of marginal oil fields, delayed the award of the licenses.

In the latest development, the NURPC issued 49 petroleum prospecting licenses to more than 100 companies, as against the original 57 bids it was seeking two years ago. Among the over 100 companies awarded Petroleum Prospecting Licence, PPL, and given at most six years to develop the fields and produce oil are the Matrix Energy, Ardova Oil, Suntrust Oil, Energia Ltd and Mainland Oil. The successful completion of this round of bids which started since 2020 is a guarantee to would-be investors that the government is willing to develop marginal oil fields. It also provides opportunity for local investors to develop their skill and push for higher investment in the oil and gas industry. It has added to the revenue base of the government. So far, it is estimated that the federal government has made over N2 trillion from marginal field sales.

The award of the marginal fields licenses provides an opportunity for the country to improve the oil production and revenue which have consistently dwindled. Operators are expected to put their acts together and fund the development of the fields and significantly boost productivity in the oil sector amidst rising global demand and high oil prices. The current crude oil output which stands at an average production of 1.2 million barrels per day, falls short of the 2022 budget benchmark of 1.88 million barrels per day and 1.77 million per day OPEC quota. The award is an effort in the right direction by the Federal Government and it is expected to boost the nation’s oil production and enhance the revenue base.

Indications are rife that the Nigerian National Petroleum Corporation, has made a bigger offer to acquire the assets of ExxonMobil earlier reported to have been acquired by Seplat Energy. This follows a report that the $1.6bn assets acquisition agreement between Seplat Energy and ExxonMobil, which would have seen that would see Seplat purchase ExxonMobil’s complete shares in the state-owned oil firm, has failed. A confirmation of the collapse of the deal came with a letter dated May 16, 2022, by the Nigerian Upstream Petroleum Regulatory Commission to ExxonMobil, stated that the deal could no longer hold because the NNPC had exercised its right of pre-emption first refusal on the assets as part of a new era to focus solely on building the long-term profitability of the NNPC Ltd.

The right of pre-emption is a legal right available to parties in a joint venture, to be the first to be considered for any planned sale or takeover of assets in the Joint Ventures if either party chooses to trade them off. The NNPC, which became the NNPC Ltd in July 2021, is the major shareholder in the Joint Ventures (JVs) with ExxonMobil has. It has therefore exercised its right of first refusal, and has also gone ahead to make an offer above $1.6bn to ExxonMobil offered by Seplat. The acquisition of ExxonMobil’s assets is part of the NNPC Ltd’s strategic expansion plan as captured in the Subsidy Act of 2021. The Act transformed NNPC from being a corporation to a profit-driven company. Its recent funding agreement with AFREXIM of up to $5 billion to grow its investment in new and existing upstream assets means that the NNPC Ltd has the capacity to buy over the share of ExxonMobil in the Joint Ventures.

The NNPC Ltd has also through a letter intimated ExxonMobil of its resolve to acquire the entire share capital of Mobil Producing Nigeria Unlimited plus contingent consideration, with the asset transfer, meant for divestments, despite the winning bid of $1.583bn initially staked by Seplat Energy. In the letter, ExxonMobil stated “We are aware that you reached an agreement to divest from onshore and shallow waters JVs,” and “clearly we are interested.” The collapse of this agreement may be injurious to the economy. It could discourage some other firms, such as TotalEnergies looking to also divest some of its assets and even investors seeking to bid for such assets to be discouraged from going into negotiations. The cancellation of the deal also portrays the nation as one that does not keep to agreements and gives the wrong signal to the international community.

In a bid to Curb Mishaps, the federal government has set up a committee peopled with members drawn from the Nigerian Society of Engineers (NSE), Transmission Company of Nigeria (TCN) and the Abuja Electricity Distribution Company (AEDC) to certify meter installers in the country. This was disclosed by the Nigerian Electricity Management Company (NEMSA), the agency responsible for certifying electrical installation personnel.

According to NEMSA, this committee would ensure that only competent and qualified personnel certified by the agency are allowed to work in the industry. This is to preserve ethics and specialization in carrying out electrical installation works, and ensuring that electricity meters are properly installed. Since the commencement of the certification in 2016, NEMSA has validated over 9,000 of electricity contractors. It has taken the certification of electricity metering more important due to the federal government’s current metering policy and regulations. NEMSA is therefore poised to ensuring that quality electricity meters are installed in Nigeria such that collection efficiency and industry liquidity are maintained. It is important to ensure that meters with the right load capacity are fixed in residential and business areas with the right load requirement to avoid blowing up the system. This will remove the havoc that meters have caused and ensure the safety of life and property as fire outbreaks could happen and cause disaster in those premises or buildings.

Nigeria is working on an ambitious Energy Plan towards reducing the energy shortcomings by year 2030. The plan includes the Government’s flagship project to electrify Five-Million households and Twenty-Million people using decentralized solar energy solutions. This was the submission of President Muhammadu Buhari in the High-Level Dialogue on Energy at the sidelines of the 76^th United Nations General Assembly in New York.

Nigeria has developed Energy Transition Plan, with the support of the UK COP26 Energy Transition Council. The plan has laid out the roadmap to reach net-zero and highlights the scale of the effort required, including the development and integration of renewables into current grid infrastructure at tremendous scale and electrification of all sectors. The plan also takes into account, the provision of access to electricity and clean cooking solutions for those currently without access.

According to the president, the scale of financing required for Nigeria to achieve this plan, amounts to over US$400 Billion across the Nigerian economy in excess of business-as-usual spending over the next thirty years. This breaks down to US155 Billion net spend on generation capacity, US$135 Billion on transmission and distribution infrastructure, US$75 Billion on buildings, US$21 Billion on industry and US$12 Billion on transport. This shows the magnitude of resource required to actualize this plan, and a huge opportunity for oil and gas investors.

A total of N6.14 trillion is owed to Nigerian banks by oil and gas operators and power companies in Nigeria.  The debt rose to this amount in June, 2021, from N5.94tn at the end of 2020. This represents about 28% of the N21.89 trillion loans advanced to the private sector by the banks as of June 2021. The bulk of this loan, N5.32 trillion is owe by Oil and gas firms, while the rest, N823.28billion is owed by power firms. Further analysis of the indebtedness shows that the oil firms operating in the downstream, natural gas and crude oil refining subsectors owed N3.99 trillion, while those in the upstream and services subsectors owed N1.33 trillion. The greater part of the power sector loans, amounting to N482.30billion, is owed by power generation firms and independent power producers, while transmission and distribution firms owed banks N340.98billion.

In another angle, seventy-seven international and Nigerian oil and gas companies are currently owing the Nigerian government about $6.48 billion (over N2.6 trillion). The indebtedness comes from the companies’ failure to remit petroleum profit tax, company income tax, education tax, value-added tax, withholding tax, royalty, and concession on rentals. A breakdown of the figures shows that a total of $143.99 million is owed as petroleum profit taxes, $1.089 billion as company income taxes and $201.69 million as education tax, $18.46 million and $972,000 as Value Added Tax (VAT), $23.91 million and $997,000 as Withholding Tax, $4.357 billion as royalty oil, $292.44 million as royalty gas, while $270.187 million and $41.86 million were unremitted gas flare penalties and concession rentals, respectively.

In what seems like a big support to the clamour by host communities that oil and gas companies operating in the country should site their headquarters in their host communities, the senate has given its three committees on Petroleum Resources Upstream, Downstream Petroleum Sector and Gas the mandate to liaise with the Ministry of Petroleum Resources and the Presidential Implementation Committee on the Petroleum Industry Act (PIA), to facilitate the relocation of oil and gas companies operating in Nigeria to their various operational bases in host communities to ensure unhindered operations.

Sponsored by Senator Albert Bassey Akpan and 23 other Senators, the motion seeks to compel oil and gas companies operating in Nigeria to relocate to their host communities and operational bases in order to reduce the high cost of production militating against maximum revenue from crude oil and gas sales to the federation account. The senators noted that the issue of insecurity and militancy brandished as excuses has been addressed by the Petroleum Industry Act, 2021, which placed certain responsibilities on the security, peace and safety of oil and gas infrastructure on the host communities to safeguard and ensure peaceful coexistence between oil and gas companies and their host communities.

With the relocation to these areas, the workers will also relocate to these areas and as such the government of these areas will benefit from the revenue, that is payment of tax, within the localities that they are exploiting this oil and gas, because the workers will no longer claim that they are not resident in these areas.

Members of the Senate this Wednesday confirmed the appointments of the board members of the Nigerian Upstream Regulatory Commission (NURC), in line with the provisions of Sections 11 and 18 (1-5) of the Petroleum Industry Act, 2021. The Senate Committee on Petroleum Resources had submitted a report, which showed that the nominees demonstrated sufficient knowledge of the workings of the petroleum industry, especially the upstream petroleum sector, as well as the economics of petroleum exploration and production. This formed the basis for the confirmation.

By the approval of the board members for the commission, the Department of Petroleum Resources and its leadership led by Engr. Sarki Auwalu has ceased to exist. The NURC has automatically replaced the Department of Petroleum Resources and assumes its responsibilities. The Petroleum Industry Act, 2021 gives NURC enormous and huge responsibility to set and establish the Commission. All activities in the upstream subsector of the oil and gas industry will hence forth revolve around this new board.

The members of the board are Isa Modibbo – Chairman; Gbenga Komolafe – Chief Executive; Hassan Gambo – Executive Commissioner, Finance and Accounts; and Rose Ndong – Executive Commissioner, Exploration and Acreage Management. The new board has a responsibility to provide a solid and stable foundation for Commission.

Good news to everyone in Nigeria as the federal government has finally shelved the idea of removing petroleum subsidy, at least for now. The minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, has announced the resolve of the federal government to jettison its earlier plan to remove subsidy on petroleum products which was billed to commence by July this year. This was corroborated by the Minister of State for Petroleum Resources, Chief Timipre Sylva, who stated at a different forum that subsidy paid on the pump price of petrol would remain for now. The suspension follows threats by labour unions in the country to embark on strike to make sure that the any of such implementation is reversed.

The federal government initially planned to remove subsidy on petroleum products from July. This was in line with the provisions of the passage of the Petroleum Industry Act (PIA), that all petroleum products should be deregulated. According the National Executive Council (NEC), the removal of subsidy will see a pump price of fuel rise from the current N162 to about N400. Given the ripple effect of previous increase in the pump price, the cost of transportation would have led to the hike in the price of other products, thereby increasing inflation, a situation that would have further depleted the income of consumers.

for the plan to hold, the government has to seek the intervention of the national assembly to suspend a portion of the PIA, as well as present a budget for the approval of subsidy to the national assembly, to cover subsidy payment from July till a time deemed appropriate for its eventual removal. This will help government not to breach a constitutional as well work towards removing when the people would have made significant arrangements for absorbing the shocks that will come with the removal, such that the impact and consequences will not add to hardship.

The government should use this period to put in measures such as deployment of an alternative to the Premium Motor Spirit (PMS) and also the roll out of enhanced refining capacity in the country, including the 650,000 barrels per day Dangote Refinery and also the rehabilitation of the four national refineries that have a combined capacity of 450,000 barrels per day. Manufacturers should as work out strategies to absorb the expected cost such that the burden of such increase will not be completely transferred to the consumers.

In line with the provisions of the Petroleum Industry Act (PIA), 2021, signed into law recently by the president Mahammadu Buhari, the NNPC Limited has been incorporated as a limited liability company by the Corporate Affairs Commission (CAC). The Act requires the Minister of Petroleum Resources under section 53(1) to cause for the incorporation of the NNPC Limited within six months of the enactment of the PIA in consultation with the Minister of Finance on the nominal shares of the Company.

Since the passing into law of the PIA, 2021, the president had in September ordered the Group Managing Director of the NNPC, Mr Mele Kolo Kyari, to take necessary steps to ensure that the incorporation of the NNPC Limited in accordance with the provisions of the PIA 2021. Consequently, the preside had also approved the appointment of the Board and Management of the NNPC Limited, whose tenure are to commence from the date of incorporation of the company with Senator Ifeanyi Ararume named as the Chairman of the Board.

With the incorporation of NNPC limited, all assets and liabilities of the NNPC will be transferred to NNPC Limited, government has also indicated interest to fulfill relevant sections of the Act, one of which is the intention to set in motion the process of immediate commercialization and privatization of not only the operation of, but also a possible future private ownership of shares in the NNPC Limited. NNPC limited also retains all Guarantees against government and NNPC as well as their employees and Conditions of Service.

So far, the government has shown readiness to implement that Act. It is expected that this swiftness will subsist. The PIA Act especially as concerned with the NNPC limited holds a lot of promises which can only come through if well implemented. The NNPC Limited is expected to compete with the best of other national oil companies globally, and take its pride of place among corporate giants of repute not only in Nigeria but also in the global oil and gas industry.

Investment opportunities worth about $3.097 billion currently exist in the country’s condensate refineries’ space. This was revealed by the Nigerian National Petroleum Corporation (NNPC) at the 15th Oil Trading and Logistics (OTL) Africa Downstream Week. the NNPC stated that Nigeria’s demand for petroleum products is expected to grow from 15.1 million MT in 2020 to 17.3 million MT by 2025, requiring that the refining capacity of the country must grow to about 1.52 million barrels per stream day (MBPSD) to meet its petrol requirement in the next four years.

The NNPC is currently refining about 445,000 BPSD and when completed, the Dangote Refinery will about 650,000 BPSD. These will only amount to about 60 per cent and nameplate capacity, respectively, would supply 76 per cent of that requirement, leaving a shortfall of about 17 million litres of PMS daily. Through the private sector driven co-location at the existing facilities in PHRC and WRPC, respectively, the NNPC is adding 215,000 BPSD of refining capacity. Modular refineries are also adding capacities, such as the 5,000 BPSD Waltersmith refinery, which will be upgraded to 50,000 BPSD. The condensate refineries are expected to add the remaining 250,000 BSPD through the partnership. The co-location and condensate refineries will close the PMS supply-demand gap and create positive returns to the investors.

The NNPC therefore expects an investment of about $3.097 billion in condensate refineries to close this gap to improve the supply and distribution of petroleum products, revamp LPG infrastructure and build CNG plants.