NUPRC Gives Approval For Creation Of 60 Host Community Development Trust Funds

The Nigerian Upstream Petroleum Regulatory Commission has given approval for the creation of 60 Host Community Development Trust Funds.

The Commission’s chief executive, Engr Gbenga Komolafe said this during a speech delivered at the Petroleum Club Quarterly Dinner.

He spoke on the topic, “Nigerian upstream petroleum sector: Value optimisation, energy transition and regulatory perspectives”

Section 235 of the Petroleum Industry Act 2021 gave the Commission the responsibility of ensuring conducive and peaceful relationship among stakeholders within the Host Community through the implementation of the Host Communities Development Trust.

Speaking at the event, Komolafe said the Commission, in collaboration with relevant stakeholders, has developed templates and gazetted regulations, which includes that of the Host Community Development Trust (HCDT).

The essence of the HCDT, he added, is to integrate oil bearing communities into the value chain and effectively cater for the development needs of impacted communities.

This, according to him, would positively curb restiveness in such communities and offer enabling environment for operators to thrive.

He said the Host Communities Fund initiative would guarantee seamless operation, boost investor confidence, and provide enabling environment for sustainable development of the country’s hydrocarbon resources.

“We are happy to disclose that over 60 Host Community Development Trust have been approved by the Commission. This is indeed a milestone in the implementation of the PIA, 2021,” he added.

In the area of crude oil production, the NUPRC Boss told the gathering that the Commission is focusing on shut-in wells which can be revived.

In pursuance of this, Komolafe recalled that the Commission inaugurated a committee on June 23, 2022, to conduct industry-wide study on reactivation of Shut-in strings.

The committee, he stated, has submitted its report, and includes recommendations categorised into Quick Wins, Medium and Long-Term initiatives that will enhance national oil and gas production volumes.

He said, “Findings from the report revealed that, over 900,000 barrels of oil per day can be earned from the Quick Win interventions while the Medium and Long-Term initiatives could potentially add 1.2M barrels of oil per day if properly and fully implemented.

“The total number of strings that need to be revived is also known and the Commission has commenced engagement with the relevant operators to operationalise the initiative.

“The Commission has also completed the 2020 Marginal Field Bid Round and issued fifty Petroleum Prospecting Licenses (PPLs) to deserving awardees. It is expected that with the existing discoveries in the awarded fields, early Field Development Plan (FDP) would be pursued by the awardees leading to incremental oil and gas production.

“On its part, the Commission is facilitating timely approvals for expedited re-entry and early production. The estimated incremental production from the awarded fields is approximately 58,000 bpd and 87mmscf/d.”

In the short to medium term, Komolafe said the Commission expects an estimated incremental volume of 461,000bpd and 565mmscf/d from new wells and well re-entry.

He added that in the long term, the Commission would be expecting an estimated incremental volume of 162,000bpd and 868mmscf/d from FDPs which have been approved and are at various stages of execution.

In the area of crude oil theft, he said the collaborative efforts between the regulators, the Nigerian National Petroleum Company Ltd and the security agencies have continued to record good dividends as production figures are progressively increasing.

He put the January 2023 volume at approximately 1.5 million barrels per day of oil and condensates, noting that this is expected to increase as further measures are introduced and sustained to remove all illegal connections that aid crude oil theft.

On the issue of metering errors, he explained that the Commission is ensuring that Original Equipment Manufacturers (OEMs) licenced directly as agents of the Commission will be responsible for deployment and maintenance of metering facilities across the Nigeria’s oil and gas facilities for transparency in hydrocarbon accounting.

This reform measure, he noted, offers a paradigm shift from the trajectory in Nigeria’s hydrocarbon measurement since oil was discovered in Nigeria in Oloibiri in 1956.

He also said the measures align with a fundamental principle of Justice which states that “Let no one be a judge in his own case.”

In its quest to improve operational efficiency, Komolafe stated further that the Commission has redesigned it’s operational processes to be more business-like and accountable.

”Processes have been streamlined and clarified and staff are encouraged to continually challenge the status quo in line with our philosophy of continuous innovation and improvement.

Implementation of Host Community Provisions under Section 235 of PIA,” he added.

In the area of cost monitoring and benchmarking, the NUPRC Boss said the Commission’s strategic thrust is to ensure that all it’s interventions as regulator translate into significant reduction in the cost of doing business in the upstream petroleum industry.

In addition to these measures, he said Section 8 of the Petroleum Act mandates the Commission to undertake the commercial regulation of the operations of the industry as well as develop cost studies and benchmarks for the evaluation of upstream petroleum operations.

According to him, the focus on cost reduction as it relates to unit operating cost (UOC) stems from a comparative analysis of other jurisdictions, with a view to determining where it want to be.

“Our current UOC ranges from $15 (deep offshore) to $25 (onshore/shallow waters). It is obvious that Nigeria needs to improve its cost efficiency,” he added.

He said the Commission is looking orward to a more collaborative working relationship with the operators in the industry for value optimization.

Such collaborative aspirations, he noted, would target unlocking the huge potentials Nigeria has as a nation in the Deep Play prospects, Frontier Basins and the Deep Offshore environments.

“We would also be leveraging on technology to achieve our mandates by ensuring all our processes become fully automated and more transparent in line with the prescriptions of the PIA.

“Furthermore, relevant guidelines that will provide clarity on every aspect of oil and gas operations will be issued by the Commission in keeping with our core values,” he added.