How NUPRC worked assiduously to reposition upstream oil and gas industry in Nigeria
By ENGR. GBENGA KOMOLAFE
It is a great pleasure and honour for me to deliver this keynote speech to this esteemed audience of professionals and eminent stakeholders in the African oil and gas industry at the8th Sub-Saharan Africa International Petroleum, Exhibition and Conference (SAIPEC). To begin, let me thank our host, the Petroleum Technology Association of Nigeria (PETAN) for all the efforts and contributions in promoting the development of the oil and gas industry through this commendable annual exhibition and conference. Undoubtedly, SAIPEC has become an excellent platform for promoting interaction and networking amongst a broad spectrum of professional communities from oil and gas industry and other industry stakeholders, thereby facilitating new businesses and partnership opportunities in the African oil and gas sector.
The post-Paris Agreement era has witnessed a growing recognition of the urgency to combat climate change. Consequently, more and more countries, and entities are establishing carbon neutrality targets, which in turn have resulted in a global shift towards a more sustainable and low-carbon energy landscape. This has also resulted in a decline in oil and gas investment as investors and financiers face mounting pressure from various fronts. Moreso, at the recently concluded COP28 Summit, world leaders agreed to work together to triple the global renewable power capacity by 2030. Interestingly, at the same Summit, the global leaders revealed their intent to work collaboratively and expeditiously“…taking into consideration different starting points and national circumstances”, thereby paving the way for Africa to adopt transition pathways that recognize its economic landscape and national situations.
Thus, the Agenda for Africa, and other resource rich developing economies is that the evolving energy dynamics must be calibrated against geography, history, and politics as well as the need for energy justice, equity, inclusivity, and sustainability. The new dynamics in the global energy arena necessitate that Nigeria, a country long dependent on the exploitation of oil and gas as the mainstay of its economy, re-examine its strategy to secure a blossoming energy future while meeting the global climate goals. Hence, the legal, governance, fiscal and regulatory frameworks provided in the Petroleum Industry Act, 2021 (PIA), amongst several objectives, aim to promote transparency, efficiency, and innovation for sustainable development of Nigeria’s hydrocarbon resources as well as meet the global environmental sustainability goals.
As a country, Nigeria boasts of 36.966 Billion Barrels of oil which ranks her 2nd in Africa, 8th in OPEC and 11th in the World. Nigeria is also richly endowed with 208.83 Trillion Cubic Feet of Natural Gas reserves with upside potential estimated at 600 TCF. Aside the hydrocarbon potentials, Nigeria is blessed with potentials for green and blue hydrogen, solar, wind, biomass and other sources of renewable energy to leverage for right energy mix in the energy transition regime, as well as critical minerals such as lithium, manganese, copper, graphite and nickel for development of clean energy technologies. Indeed, Nigeria’s potentials are derived from its human, natural and material resources which must be mobilised to propel her on a path of economic growth and development and for her sustainable energy future.
Unfortunately, in the years preceding the enactment of the PIA (2021), investments in the Nigerian oil and gas industry declined mostly due to regulatory uncertainty, de-funding of fossil fuel development occasioned by energy transition and the global call for decarbonization. However, the Commission is charting a new course in the Upstream Petroleum Sector through its 10-year Strategic Plan (2023-2033) unveiled in May 2023, and through the forward-thinking technically and commercially viable priority regulations developed so far to support energy security and drive emissions reductions pursuant to the PIA.
Investment Opportunities
As we navigate through the complexities of the global energy transition, the future we foresee for the Nigerian petroleum industry is one that should assure for the utilization of our God-given hydrocarbon resources for shared prosperity, energy accessibility, affordability, sustainability, security as well as energy independence and energy sovereignty. Those are the underlying goals upon which the Nigerian Government declared natural gas our immediate transition fuel and designed the Decade of Gas programme. At the heart of this programme is the vision to ensure that gas actually plays a role to lift us from the challenges that confront us in order to drive sustainable development. Recent study has revealed that growth in gas demand outstrips supply. Between 2020 and 2030, demand is expected to grow exponentially at a compound annual growth rate of 16.6% p.a. Thus, NUPRC is proactively pivoting the industry to close the supply gap.
Natural gas production is projected to increase from 8.0 bcfd in 2020 to 12.2 bcfd in 2030 driven by major projects such as NLNG Train 7 & Train 8, Nigeria/Morocco pipeline, Ajaokuta-Kaduna-Kano (AKK) Natural Gas Pipeline Project, and so many other gas projects. The import of this is to showcase the huge opportunities in gas business for both the existing investors and new entrants in the Nigerian upstream gas sector. Further investment opportunities have been created through the intensified efforts towards eliminating flared gas, methane abatement and reduction of fugitive gas emissions. As part of the efforts to deepen our gas market and ensure decarbonisation of upstream operations, the Commission recently awarded forty-nine (49) flare sites to successful bidders for flare gas commercialisation through the Nigerian Gas Flare Commercialization Program (NGFCP). Through this initiative, more gas would be available for domestic utilization as Liquefied Petroleum Gas (LPG), feedstock for power generation plants, fertilizer plants, petrochemicals and export. Further investment opportunities are also available in the licencing rounds, which would be conducted more frequently in line with the provisions of the PIA and the relevant Regulations. In addition, there are also huge opportunities in Seismic acquisition on multiclient basis, development of deeper hydrocarbon opportunities, etc. There are also business prospects in carbon-pricing system currently being stewarded by the Commission. Each of these areas provides a unique entry point for willing investors.
Let me at this point reassure willing investors that implementation of the Host Communities Development Trust (HCDT) provisions of the PIA has restored confidence and created social inclusion for the host communities by the operators. In this regard, the Commission, in carrying out its oversight roles, has registered a total of One Hundred and Three(103)HCDTs, and has deployed an intelligent digital, platform for reporting, monitoring and ensuring transparent administration of the HCDTs for sustainable operations in the Nigerian communities.
The Commission has indeed worked assiduously to reposition the upstream oil and gas industry in Nigeria through a Strategic Plan that aligns with the mandate of the PIA. However, we are not resting on our oars. In furtherance of the strategic plan, the Commission would undertake regulatory activities, and implement strategic initiatives articulated in the NUPRC Regulatory Action Plan (RAP) for 2024 and the Near Term. The RAP is centered around ensuring regulatory certainty and predictability, vacating entry barriers, promoting global competitiveness, deepening transparency and accountability, value creation and monitoring, host community and environmental sustainability as well as acceleration of field developments. The Commission is confident of fostering a resilient and sustainable upstream oil and gas industry in Nigeria through effective collaborations with industry stakeholders while focusing on twenty-four (24) cardinal areas of the RAP benchmarked against international best practices. Despite the challenges posed by the climate calls, we are also confident that investors will leverage sustainability mandates in the Petroleum Industry Act (2021) as well as its generous fiscal incentives which include: zero-hydrocarbon tax for deep water developments, reduced royalty rates based on production and terrains, and tax consolidation provisions amongst others.
Permit me to reiterate that the global momentum toward renewable energy sources and the call for phase-out of fossil fuel is gaining traction. The need for more collaborations among the African oil and gas producing nations has become an increasingly urgent obligation on us. Endowed with over 125.3 billion barrels of oil reserves, 625 trillion cubic feet of natural gas and substantial reserves of highly sought-after green transition minerals, Africa is poised to deploy best practices and technology to ensure strategic and responsible utilization of the vast natural resources in addressing challenges we face. And as President, Bola Ahmed Tinubu, GCFR, aptly declared at the 78th UN General Assembly in New York, “African nations will fight climate change but must do so on our own terms. To achieve the needed popular consensus, this campaign must accord with overall economic efforts”. This resounding statement underscores the commitment of our leadership to foster regional collaboration amongst the African nations and position the continent as a global hub for petroleum and other energy-related industry activities.
It would be recalled that we proposed the idea for establishment of African Petroleum Regulatory Forum (AFRIPERF) during a meeting with African Leaders at the African Energy Leadership Forum and Awards event at the Offshore Technology Conference (OTC) held at Houston in May 2023, with a vision to establish a formal mechanism for collaboration amongst African oil and gas regulatory bodies. The forum is expected to provide a platform for all stakeholders to actively participate in shaping the regulatory landscape of Africa for numerous benefits including fostering regional collaboration, entrenching best practices and regulatory stewardship, facilitating knowledge sharing and technology transfer, attracting investment and enhancing global competitiveness etc. The forum will also enable the regulators to have a unified voice to collaborate more effectively on global level. In this respect, it is our recommendation that a committee be set up at this forum to develop the framework and modalities for the regional collaboration. Upon inauguration, it is also our expectation that the forum will potentially leverage support from several other pan African organizations that can provide technical expertise, financial assistance, and collaborative opportunities.
Conclusion
Ladies and gentlemen permit me to conclude by re-echoing the words of President Bola Ahmed Tinubu: “…Africa is nothing less than the key to the world’s future…”.Africa is a nation where needs meet opportunities.
. Being the keynote speech by the Commission Chief Executive, NUPRC, Engr. Gbenga Komolafe, at the Annual PETAN Sub-Saharan Africa International Petroleum Exhibition and Conference [SAIPEC] in Lagos, Nigeria
