NUPRC to probe oil producers’ operations, investments amid output constraints

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) says from Wednesday, it will invite exploration and production (E&P) companies to scrutinise their operational and commercial activities.

Gbenga Komolafe, chief executive officer (CEO), NUPRC, made this known in a statement on Tuesday.

The development comes on the back of the country’s declining oil production output.

In August, crude oil production dropped below the one million mark.

According to the statement, Komolafe said the commission is determined to take bold and revolutionary steps — using a non-kinetic approach — to address the challenges of crude oil theft, improve national crude oil production and save the country’s economy from further decline.

He said NUPRC is not an operator but it has a statutory responsibility as a regulator to probe into the situation and seek drastic solutions to the challenges, as the current situation “has seriously affected the country’s economy”.

Komolafe added that the challenges have also posed a huge challenge to the funding of the national budgets.

“The Commission will do everything within its authority to challenge the narrative and halt further degeneration by ensuring transparency in hydrocarbon accounting,” the NUPRC boss said.

“One of the steps, in line with its technical and regulatory powers, is to probe into the operational and commercial activities of exploration and production companies operating within the country to ascertain the level of compliance with the terms and conditions in their operational contracts, as well as the challenges impeding expected deliveries.

“The commission will particularly be interested in the mode of operation of the companies in relation to the approvals as per their operational licences, the level of conformity with the technical provisions and production terms, their level of investments to enhance capacity utilisation, and the challenges they are facing, especially those contributing to the current unacceptable situation.

“Beginning Wednesday September 28, the commission will be engaging all the exploration and production companies individually to get to the root of the current situation as it believes strongly that there might be more fundamental issues in the industry affecting expected output and deliveries beyond the much touted issue of crude theft.

“Already invitations have been extended to all the operators for the engagement during which they would be expected to present their work programme performance, acreage status, divestment plans (if any), field development plan (FDP) implementation status, upstream investment in the last five years, exploration activities including geophysical acquisition/processing/re-processing, leads and prospects maturation plans, and exploratory wells drilled in the last five years.”

Komolafe also said during the engagements, the companies would be required to present their reserve status, life index, current reserves replacement ratio (RRR), and reserves growth strategy (RGS).

He said they would also be required to present status of joint venture/production sharing contract activities, including ongoing facility projects, number of drilled wells, re-entry applications and approvals grafted in the past five years.

In addition, they would have to submit shut-in wells, their potentials as well as reactivation plans and expected incremental volumes.

Other pieces of information required are technical production performance and production optimisation strategy, including production profile for the last ten years as well as status of production facilities, and also unit technical cost of production on field basis.

“The commission would also insist on knowing their gas development strategy, gas reserves commitment status and domestic gas delivery obligation performance; status of utilisation activities (if any); crude oil evacuation route and exported volumes from January this year, status of statutory payments as well as the challenges they are facing in the course of their operations,” Komolafe added.

“The move by the commission is to ensure transparency and accountability in the industry to guarantee effective operation and output delivery in the interest of the country’s economy and the benefit of the investors and industry operators.”