The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Tuesday in Abuja read the riot act to producers in the oil and gas industry that it will not hesitate to apply necessary measures to erring/deviant producers/operators whose activities constitute a hindrance to the effective implementation of the Nigerian Gas Flare Commercialisation Programme (NGFCP), the country’s climate action plan.
The Commission Chief Executive (CCE), Engr Gbenga Komolafe who handed down the warning at an Executive Session with the producers underscored the pivotal role of producers in the successful implementation of the NGFCP and insisted that the Commission would go as far as applying necessary measures against erring/deviant Producers/Operators to the extent of the ultimate consequence of revocation of licenses or leases.
Engr Komolafe said the Commission will activate the necessary provisions of the Petroleum Industry Act (PIA) 2021 and enabling regulations such as the Gas Flaring, Venting and Methane Emissions (Prevention of Waste and Pollution) Regulations 2023 to ensure faithful implementation of the programme, recalling that that at the inaugural session of the Producers Forum earlier in the year the significance of the NGFCP to achieve the elimination of the unwholesome practice of and wasteful of gas flaring with its attendant deleterious social, health and environmental impacts was underscored.
“Moreover, as a nation, the NGFCP represents one of our key climate actions to combat emissions and support Nigeria’s transition endeavors. The imperatives of the Programme have taken on added significance with the recent pronouncements of Mr. President at global fora and the international attention that the Programme has attracted. Nigeria cannot afford to fail! We cannot fail!” Engr. Komolafe indicated.
The Commission has so far issued relevant letters of award to Forty-Two (42) individual companies for all Forty-Nine (49) Flare sites on offer. These flare sites represent locations that are within the operating areas of fifteen (15) companies present at this engagement. The importance of your cooperation and collaboration cannot be over emphasized.
The CCE noted that whereas the Commission has received some encouraging feedback on support by some producers, many awardees have decried the lack of engagement by producers contrary to the spirit of the programme and the Commission’s letter to them in respect of the programme.
“Consequently, this Executive Session has been convened to keep us abreast of the critical stage we are in the NGFCP and inform us of the need to progress the project implementation with the urgency required and proceed with the onboarding of the awardees,” the CCE stated while indicating that the meeting was to provide an avenue for producers to share their inputs, comments, concerns, and recommendations to enrich the NGFCP.
The Commission identified key issues in the programme and addressed them during the meeting. They include the issuance last year of “Cease and Desist” letters to Producers to refrain from developing flare gas utilisation projects and frustrating the flare profile earmarked for the NGFCP. It warned that the Commission will not entertain any ploy to frustrate awardees, the efforts of the Commission or the Nigerian Government for that matter.
Another issue was Commercial Agreements between the Producer/Awardee which the Commission expects to be at an advanced stage based on the issued template. It again warned that it would not condone any roadblocks that would compromise the timely delivery of the projects. Every approach must therefore be pursued between Producers/Awardees to execute the agreements within the set timeline.
Other issues include access to flare site and additional data/site-specific information, reduction in volumes of flare profile and potential benefits to producers, stressing that irrespective of the challenges the success of the NGFCP will be a win-win for all.
On the reduction in volumes of flare profile, the Commission was surprised to receive feedback from awardees on claims by some producers that the forecasted gas volumes may not be available, only a few months after flare volumes had been forecasted by respective teams of operators. It warned that the Commission will not accept any ploy to dissuade the awardees from embarking on their project development pointing out that it might be forced to activate the relevant provisions of the PIA and Regulations to address willful misrepresentation of information and data.
Other challenges so far registered by Awardees include: Assurance of flare gas supply; Access to land and community support; Delayed execution of agreements due to extended due diligence process and Unwillingness to sign connection agreement with Awardees.
The CCE pointed out that “the global pressure on oil and gas to combat emissions and decarbonise amidst climate and environmental activism should represent an added reason to leverage the NGFCP as a quick-win solution to address flaring. In addition, I wish to draw your attention to the benefits accruable to Producers for the smooth implementation of the Programme.”
He, however, pointed out that the Commission was mindful of concerns expressed by some producers during earlier engagements such as Safety concerns – Protection of Producers’ Assets and Personnel, facilities if infrastructure/technology is deployed on their sites; Potential impacts on upstream operations; Prior investments in flare gas capture; Awardee technical and financial capacity for project deliverability and Termination of flare payment obligation on producers.
They were assured that the Commission recognises the seriousness of the listed concerns by producers and “will not sacrifice the safety of our people, the integrity of assets or jeopardise our fledging oil production. To this end, the NGFCP ensures that prospective bidders have the requisite expertise and experience to develop oil and gas projects that meet minimum standards and specifications acceptable to the industry.
“For instance, we have emplaced a rigorous regime whereby the engineering design and construction of the third-party connection facilities are subject to the prompt review of the respective Producer, as part of the Commission’s approval process. Flare Site Permit Holders would likewise be required to comply with industry specifications and use approved vendors acceptable to the applicable Producer for the construction of Gas connection assets. These are just a few of the measures in place to provide reasonable comfort to Producers and ensure safe, reliable, and uninterrupted operations during the implementation of the NGFCP.”
The CCE nonetheless appreciated the continued commitment of the producers towards ensuring the successful execution of the NGFCP 2022 programme and addressing the effects of gas flaring and decarbonising upstream operations and sought insights and perspectives on ways to deepen support and ensure programme success.