Nigeria’s upstream oil regulator has said that an annual oil and condensates production target of 2.6 million barrels per day by 2026, an ambitious jump from 2023 levels of around 1.6 million bpd. Nigeria has suffered declining production due to crude theft and vandalism of pipelines in the Niger Delta as well as low investment in the sector, is hit government revenue. According to NUPRC the Federal government plan is to conduct oil licensing round in 2024, to attract new investors and increase investment that will ultimately raise Nigeria’s oil reserves toward 40 billion barrels, from the present 37 billion barrels. The planned licensing round is in line with Section 73 of the nation’s Petroleum Industry Act, PIA, a comprehensive legislation aimed at achieving increased investment, restructuring as well as transparency and accountability in the industry. The Commission Chief Executive, Nigerian Upstream Petroleum Regulatory Commission, NUPRC, Engr. Gbenga Komolafe, who confirmed this in a policy statement said “the Commission shall, beginning 2024, conduct all future licensing rounds based on a Licensing Round Plan and modern acreage licensing practices, to include the periodicity of licensing based on predictability of timelines and long-term national economic and developmental agenda.
He said the exercise will enable Nigeria accomplish set objectives, including the generation of funds, attract fresh investments in exploration and development, meet exploration or production targets, increase reserves, advance bilateral relationships, promote indigenous participation and domestic wealth and monetise its gas resources for enhanced domestic supply or to expand global market share. Cost of oil production to drop below $20 per barrel Engr. Komolafe, who expressed concerns over Nigeria’s high cost of production, said “in accord with the commercial regulation mandate of the Commission as enshrined in Section 4 of the PIA, the Commission would, in 2024 and the near term, pursue strategies aimed at optimising the unit cost of production for oil and gas by driving the reduction of the current average unit cost of production in all terrains to below $20 per barrel, in the near term from current sub-optimal levels of $25-40 per barrel.” He said “in 2024, the Commission will optimise the functionality of automation systems by enhancing efficiency of existing optimising tools and the streamlined deployment of new ones. The use of productivity tools and electronic communication channels will be entrenched to improve customer interface, reduce logistics, and deepen ease of compliance.
“The NUPRC will ensure 100% use of the National Production Monitoring System (NPMS), the Annual Work Programme Portal, the Dynamic Acreage Management System (DAMS), the HOSTCOMPLY, and the Oil and Gas Industry Service Permit (OGISP) automation tools by the Commission and the industry.” He said “in furtherance of the mandates in Sections 6(h) & 66(e) of the PIA, the Commission has conducted a review of the state of the upstream oil and gas industry in Nigeria to enunciate appropriate strategies for encouraging and facilitating investment in the industry as well as encouraging new entrants.” NUPRC which noted the relatively low oil output due to security challenges, reduced investments, and energy transition-induced defunding of fossil fuels, stated: “The Commission, in collaboration with relevant government entities, is pursuing measures to complement the kinetic efforts of security forces, to grow oil production progressively to 1.8 MMBOPD – 2.6 MMBOPD and gas to about 10 BSCFD within the period.
These interventions include operational optimisation and enablers to delivering high-impact projects within the portfolios of Producers.” He said “Commencing in 2024, the Commission will commence the implementation of the proposed measures anchored on the seven (7) pillars of the Framework through the issuance of Advisory on Best Practices, Notices, Directives, Guidelines and Regulations. Moreover, the NUPRC shall drive compliance with GHG reporting and ESG measures as provided in the methane guidelines and the timelines stated therein.” Oil, gas prices Engr. Komolafe, who noted the increasing instability in the prices of crude oil and gas in recent times, stated: “Based on the provisions of Paragraphs 8 (1) and 23 (1&2) of the Seventh Schedule of the PIA, the Commission has established an Oil and Gas Pricing and Value Monitoring Desk to study trends and assumptions and advise in tandem with market realities. The Desk will carry on market analysis and forecasts that will avert undue exposure to Nigeria and industry stakeholders.”
