Work With Regulator To Resolve Contentious Issues, NUPRC Appeals To Marginal Field Awardees

The Nigerian Upstream Regulatory Commission (NUPRC) has appealed to winners of the 2021 marginal field bids to show understanding and work in cooperation with the regulator to resolve the contentious issues thrown up by the cumbersome model used in awarding oil fields in May 2021, before the commencement of the Petroleum Industry Act (PIA) 2021.

Engr. Gbenga Komolafe, the Commission Chief Executive who was reacting to the frustrations expressed by some of the winners assured that though it was an inherited problem, the NUPRC has been doing everything within its capacity to resolve the matter in the interest of parties involved in the transaction.

He explained that the model used in conducting the bid and awarding equities merged strange bedfellows and asked them to work together on same fields. This became a problem as it was difficult for some of them to agree on certain terms and conditions because of their incompatible and incongruent backgrounds and capacities. The development has since slowed down the commencement process and achievement of the goal for which the exercise was meant to achieve.

 The NUPRC Chief Executive acknowledged the economic impact the resultant delay is exerting on the marginal fields’ awardees following their inability to take possession of the assets, particularly those who have already paid signature bonuses; and pointed out that the situation has also affected the country’s economy which has been denied expected income from increased oil production and taxes that would have accrued from operational activities.

He noted that the model, which was complex and complicated, is the major cause of the inability of awardees to effectively proceed towards the process of production. “On inception in October 2021, the Commission prioritised the resolution of the issues thrown up in the process and has made remarkable progress in that direction.”

According to him, when it became apparent that the fallouts of the cumbersome model used were detrimental to the objective of the exercise, NUPRC moved to resolve the situation by setting up a technical team which has so far held several meetings and workshops in both Lagos and Abuja with the aggrieved parties with the aim of resolving the contentious issues, particularly the putting in place of Special Purpose Vehicles (SPVs) to help firm up the partnerships that would kick off joint operatorship of the assets.

After series of meetings and consultations on the issues and having reviewed the circumstances and noted the issues involved, the NUPRC is asking for patience and understanding from the awardees while it moves to address the issues created by a model which they willingly consented to ab initio.

The NUPRC has therefore further showed understanding of the situation by extending to the marginal fields’ awardees, the courtesy of a further 60 days grace period to remedy their default as provided for under section 97(1)(b) of the PIA 2021, and to progress with the SPVs, even though the time provided for them under the letters of award has since expired.

Those who fail to comply risk having their awards withdrawn as the regulator will soon commence issuing Petroleum Production Licenses (PPL) to SPVs upon finalisation of the operational guidelines in compliance with Section 94, Sub section 2 of the PIA 2021.

Engr. Komolafe emphasised that the Commission is determined to boost the country’s oil production levels, promote indigenous participation and provide opportunity to gainfully engage the pool of high level technically competent Nigerians in the upstream oil and gas sector and would do all it takes to meet that goal. Any issue that has the tendency of disrupting, limiting or stalling the commencement of the capacity enhancement process will be tackled with all necessary and available capabilities, he added.   

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