BusinessDay

IOCs’ divestment from upstream assets presents opportunity not threat- NUPRC boss

...says over 23 assets divested by IOCs in 13 yrs

Gbenga Komolafe, the chief executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), has charged the Independent Petroleum Producers in Nigeria (IPPG) to see the divestment of international oil companies (IOCs) in the sector as an opportunity rather than a threat to their growth.

Speaking during the IPPG dinner at the Nigerian oil and gas conference held in Abuja, Komolafe stated that the divestment by the IOCs has triggered the need to look inwards and prove the capability of the local content in value addition and optimising the development of the nation’s hydrocarbon resources.

According to him, there is a need for indigenous players across the value chain to deploy their ingenuity in promoting vibrancy and capacity utilisation in the industry

“As a regulator, the commission is not oblivious of the threat posed to the development of the Nigerian hydrocarbon industry by the divestment of the IOCs.

“The impetus for divestment by the IOC is mainly attributable to the hostile upstream petroleum environment arising from crude oil theft and energy transition as a global response to the advocacy for reduction in carbon emissions.

“Our view as a commission is that IPPG and other prospective indigenous players should perceive the IOCs’ divestment in some of the upstream assets as an opportunity rather than a threat to the development of the Nigerian upstream petroleum sector,” he said.

Speaking further, Komolafe noted that indigenous companies presently contribute about 30 percent of the nation’s crude oil and 20 percent of the gas production, as well as 40 percent and 32 percent of oil and gas reserves, respectively.

He also informed that seven indigenous companies are among the top 20 companies with the highest oil reserves in Nigeria.

He further disclosed that 57 fields were offered for awards in 2020 to indigenous operators, resulting in the issuance of 102 Petroleum Prospecting Licenses (PPLs) by the commission on June 28, 2022.

Read also: Forte Upstream Services receives ISO 9001:2015 certification for quality management

“It is worthy to note that Nigeria has the largest participation of local independents in the domestic oil and gas industry activities of all petroleum-producing countries in Africa arising from the robust local content policy.

“It is estimated that the energy demand across Africa in 2040 would increase by about 30 percent compared to the current level. Consequently, the divestment of the IOC away from our onshore and shallow water terrains presents a massive opportunity for new operators of those assets, which the IPPG is better positioned to take advantage of in order to meet the increasing energy demand.

“The commission expects the IPPG to stay competitive, optimise future energy security and be resilient in our oil and gas extractive industry.

According to him, adopting decarbonisation and improvement in cost efficiency; creating of enabling environment with host communities, and utilisation of appropriate skills and capabilities will boost the ability of indigenous companies to take advantage of opportunities presented by the IOCs divestment.

He explained that in the new energy mix, the IPPG was expected to have an increased focus on natural gas exploitation and utilisation.

“As you position to take the opportunity being presented by the divestment, the need to be prepared to make the necessary investments for gas pipeline infrastructure, gas processing facilities, meeting domestic gas delivery obligations to strategic sectors of the economy, and global gas export requirements should be in focus.

“Again, on the part of the commission, we shall provide the requisite regulatory support in line with the provisions of the PIA 2021. It is encouraging that Section 52 of the PIA provides for the establishment of the midstream and downstream gas infrastructure fund,” he said.

Get real time updates directly on you device, subscribe now.