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By Adewale Sanyaolu
Amid growing concerns that decisions at the ongoing 2021 United Nations Climate Change Conference of Parties (COP26) might impact financing for oil and gas projects, the Federal Government says it was working at creating and attracting financing initiatives for investors via constant engagement with stakeholders in the oil and gas industry.
This was even as it said it was working assiduously to reduce the high rate of crude oil theft as well as improve subsequent marginal field bid rounds (MFBR).
The Chief Executive (CCE) Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Mr Gbenga Komolafe, disclosed this during a stakeholder’ engagement with the Independent Petroleum Producers Group (IPPG) held in Lagos at the weekend.
Komolafe said President Muhammadu Buhari, has provided robust fiscal provisions in the Petroleum Industry Bill Act (PIA) to enable investments in the upstream sector, stressing that this can only be achieved through various partnerships. He explained that the industry was facing critical challenges and with discussions going on in Glasgow (COP26), it was understood that the outcome of the deliberations there will equally impact the industry due to the fact that they (stakeholders) are setting the global warming standard at 1.5 degrees Celsius as they target at impacting financing in the energy transition regime.
His words, “I want to assure your members (IPPG) that we will not because of energy transition abandon our hydrocarbon and so we really need to think outside the box and also we want to get feed-back from our stakeholders to see how we can get a structural financing group to commit on financing critical projects in our upstream sector. I know that financing is a critical issue posed by energy transition and I know that if we sit down to think together, there will be results.
The PIA had not only made the commission a technical regulator but a commercial regulator. We will upgrade to being a business enabler and other different regulatory culture and this is the prescription of the law and the law has made the commission a technical and commercial regulator and so in that wise, we will be concerned equally as to how we will facilitate financing for stakeholders in the industry and we will not do that in isolation of the members”.
The CCE added that if initiatives will be spearheaded by the regulator in terms of attracting financing for IPPG members, it will empower the members to be able to leverage on the divestment day by day, IOCs for them to enhance their capacity in the onshore and shallow water aspect of the investment in the upstream.
“We can look at ways to optimise production in the upstream and thereby enhancing federation’s revenue”, the NUPRC boss added.
In his presentation, Chairman, IPPG, Abdulrazaq Isa, noted that the FG’s support for indigeneous E&P companies’ participation in the ongoing IOC divestment was critical as it will provide a solid avenue for securing the country’s energy future.
He also expressed concerns that IPPG members who had a proven track record and demonstrated operational and financial capacity to manage marginal field assets were not given consideration in the last marginal round and added that significant upfront costs for marginal field assets may impede the ability of investors to attain production in a timely manner.
Responding to the concerns raised by IPPG, Komolafe said the presentation will serve as a working document for policy formulation as the commission commences the implementation of the PIA and added that the FG will make improvements in challenges included in the presentation.
“We understand that part of the challenges you are having is bureaucracies, cost of operations, crude oil theft and so on but we promise a different culture completely and we intend to leave a legacy of 21st century upstream regulatory commission. We enjoin you to reciprocate by being very compliant with the provisions of the Act. Pay your royalties as at when due and on our part we will ensure a very good efficient and partnership between the NUPRC and other oil and gas stakeholders,” he said.
