In Nigeria, implementing reforms in public institutions has always been a difficult task. This is because such tasks come with resistance from those working in the organization or from sponsored smear campaigns, in form of commentary or written articles. The aim of these sponsored smear campaigns and resistance is to derail the good efforts of drivers of such reform agenda.
This is clearly what can be used to describe a recent publication targeted at undermining the reforms being implemented at the Nigeria Upstream Petroleum Regulatory Commission, by the Chief Executive Officer Mr. Gbenga Komolafe.
In the said article, the incoming administration was advised to “as a matter of priority emplace an independent and powerful regulator for the Nigerian oil and gas industry, especially the upstream subsector in order to ensure compliance to operational rules as well as to increase foreign exchange earnings to the country.”
According to the publication, such regulator whether it is the NUPRC or the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) should be made to possess the same kind of powers and independence like the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) to be able to regulate the oil sector very well without undue interference by external forces.
The publication had argued that robust regulation was needed in the oil and gas industry to ensure that operating companies operate in accordance with the rules.
But what the publication failed to highlight is the fact that the enactment of the Petroleum Industry Act (PIA) 2021 has engendered a new regulatory and governance architecture, thereby providing enormous opportunities that will reshape the landscape of the petroleum industry in Nigeria.
Generally, the PIA focused and provided clarity on the oil and gas governing institutions in Nigeria, evolving petroleum administration systems, community stakeholders’ management system, and fiscal application systems.
Purposefully, the PIA established the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) as an institution responsible for the technical and commercial regulation of upstream petroleum operations.
In line with the Vision of the NUPRC which is ‘To be Africa’s Leading Regulator’; and the Mission Statement which is ‘Promoting Sustainable Value Creation from Nigeria’s Petroleum Resources for Shared Prosperity,’ the Commission had taken regulatory steps to attract investments in Nigeria’s oil and gas sector, increasing oil and gas production, enhancing peace in Host Communities in line with the PIA, 2021, reducing the unit cost per barrel of crude oil, achieving operational efficiency and enhancing transparency in hydrocarbon accounting among others.
Since 2021 when he was appointed Chief Executive Officer of the NUPRC, Mr. Gbenga Komolafe, has been taking gradual, but steady steps towards reforming the commission in line with the provisions of the PIA 2021.
The Engineer from Ondo State, has shown that he is a round peg in a round hole as he continues to take critical decisions to ensure that NUPRC’s mandates are achieved.
A Fellow of Nigerian Society of Engineers, Council of Registered Engineers of Nigeria and member of the Nigerian Bar Association (NBA), Komolafe’s expertise as a seasoned engineer and lawyer have no doubt been instrumental in giving the regulatory body the needed impetus to achieve its mandate.
In line with the mandate to regulate the upstream petroleum industry, increase production of hydrocarbons in a safe, sustainable, responsible and efficient manner that ensures and institutionalizes energy security, the Commission is focusing on the following key regulatory areas:
Attraction of Investment
Considering the significant decline in investment especially decrease in capital expenditure by 74 per cent within 2014 – 2022, the Commission is focused in turning around this negative tide by putting in place specific actions like the “drill or drop” whereby assets that are not developed are put back in the basket and then offered to willing and qualified operators as well as collaborating with local and international financiers to provide funds for operators in the industry.
Increasing Oil and Gas Production:
As part of strategy for value optimization and increased production from Nigeria’s national oil and gas reserves, the commission has been focused on regulatory initiative aimed at reviving declining wells through enhanced oil recovery approach.
To achieve this, the Commission is working with operators to identify candidate wells and appropriate interventions that would lead to increased production.
In addition, the Commission is focusing on shut-in wells which can be revived. In pursuance of this, the Commission under the leadership of Komolafe inaugurated a committee on June 23, 2022, to conduct industry-wide study on reactivation of Shut-in strings.
The committee has submitted its report, and includes recommendations categorised into Quick Wins, Medium and Long-Term initiatives that will enhance national oil and gas production volumes.
Enhancing Peace in Host Communities
Section 235 of the PIA 2021 saddles the Commission with the responsibility of ensuring conducive and peaceful relationship among stakeholders within the Host Community through the implementation of the Host Communities Development Trust.
The essence of the HCDT is to integrate oil bearing communities into the value chain and effectively cater for the development needs of impacted communities, thus positively curbing restiveness in such communities and offer enabling environment for operators to thrive.
Measures are currently being implemented by the Commission to guarantee seamless operation, boost investor confidence, and provide enabling environment for sustainable development of the country’s hydrocarbon resources.
Reducing the Unit Cost per Barrel
One of the Commission’s strategic thrusts is to ensure that all its interventions as regulator translate into significant reduction in the cost of doing business in the upstream petroleum industry. In addition to these measures, Section 8 of the Petroleum Act mandates the Commission to undertake the commercial regulation of the operations of the industry as well as develop cost studies and benchmarks for the evaluation of upstream petroleum operations.
The focus on cost reduction as it relates to unit operating cost stems from a comparative analysis of other jurisdictions, with a view to determining where Nigeria want to be. Nigeria’s current unit operating cost ranges from $15 (deep offshore) to $25 (onshore/shallow waters). It is obvious that Nigeria needs to improve its cost efficiency and practically steps are being takin in that direction to reduce operating cost.
Achieving Operational Efficiency
In the Commission’s quest to improve operational efficiency, it had redesigned its operational processes to be more business-like and accountable. Processes have been streamlined and clarified and staff are being encouraged to continually challenge the status quo in line with the Commission’s philosophy of continuous innovation and improvement.
Transparency in Hydrocarbon Accounting
The Commission recently held consultations with stakeholders in respect of the third phase of Regulations, among which is the Upstream Petroleum Measurement Regulations. These regulations have been developed to ensure sustainable transparency in hydrocarbon accounting.
The NUPRC has also conducted a forensic audit covering the period January 2020 to November 2022 on crude theft numbers with a view to ascertaining with accuracy the stolen volume of crude oil within the reference period.
The report showed that approximately 40 per cent of the volumes credited to crude losses are attributable to measurement inaccuracies.
The Commission is committed to dealing with issue of metering errors by ensuring that Original Equipment Manufacturers (OEMs) licenced directly as agents of the Commission will be responsible for deployment and maintenance of metering facilities across the Nigeria’s oil and gas facilities for transparency in hydrocarbon accounting.
This reform measure offers a paradigm shift from the trajectory in Nigeria’s hydrocarbon measurement since oil was discovered in Nigeria in Oloibiri in 1956 and it aligns with a fundamental principle of Justice “Let no one be a judge in his own case.”
System Automation and Human Capital Development
The role of technology in driving transparency, efficiency and accountability cannot be over emphasized particularly in public governance. To improve service delivery, promote business continuity, and entrench transparency and accountability in the Commission’s process and industry operations, the Commission under Komolafe’s leadership has been at the forefront of investing in technology to drive business process improvement to enable regulatory ease of doing business and reduce turn-around time.
With special focus on human capital development, the Commission is implementing training programmes that are tailored towards enhancing human capacity while entrenching professionalism and excellent service delivery.
The commission believes that optimising the value of the Nigerian oil resources can only be achieved when it does its work diligently and in line with the rule of law that guarantees increased competition, opportunities and value creation.
With Komolafe at the helms of affairs, there is no doubt that he would continue to discharge the mandate of the NUPRC in the interest of Nigeria and to support the federal government in ensuring that the country continues to derive value from the oil and gas sector.
