NUPRC Issues Warning Against Disruptive Actions Affecting Gas Flare Commercialization Plans
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) issued a warning on Monday to players in the oil and gas industry, cautioning against obstructing the Nigerian Gas Flare Commercialisation Programme (NGFCP). The NGFCP is designed to eliminate routine gas burning in the country.
Mr. Gbenga Komolafe, the Chief Executive of NUPRC, expressed concern during a meeting with chief executives of producers operating assets under the NGFCP in Abuja. He emphasized the importance of ensuring the success of the program, given the significant attention it has garnered both locally and internationally.
Komolafe revealed that he had received complaints about producers resisting engagement with the gas flare commercialization awardees. He warned that individuals or entities impeding the program could face the full provisions of the Petroleum Industry Act (PIA).
Earlier, the commission had issued letters of award to 42 individual companies for all 49 flare sites available. These sites were within the operating areas of 15 companies present at the engagement.
While some producers reportedly provided positive feedback and support, Komolafe noted that many awardees were expressing dissatisfaction with the lack of engagement by producers, contrary to the program’s spirit and an earlier letter sent to them.
The executive session was convened to update stakeholders on the “critical stage” of the NGFCP and stress the urgency required for progressing the project implementation.
“At this juncture, let me categorically state that the commission, under the provisions of the PIA 2021, and enabling regulations such as the gas flaring, venting, and methane emissions (prevention of waste and pollution) regulations 2023, will not hesitate to apply necessary measures to erring/deviant producers/operators to the extent of the ultimate consequence of the revocation of licenses or leases,” he stated.
Despite the challenges and concerns raised, Mr. Gbenga Komolafe assured that the commission recognizes the producers as critical stakeholders. He expressed confidence in their support and emphasized the importance of their cooperation in achieving the successful execution of the Nigerian Gas Flare Commercialisation Programme (NGFCP).
Highlighting the significant achievement of the program in reaching the critical milestone of awarding preferred bidder status, Mr. Gbenga Komolafe emphasized the need for support in obtaining permits and executing projects.
Addressing concerns raised by awardees, he acknowledged that ongoing efforts were being made to resolve these issues. Komolafe stressed the collective effort required to ensure that timelines are adhered to in the implementation of the Nigerian Gas Flare Commercialisation Programme (NGFCP).
“Exactly a year ago, in November 2022, the commission issued ‘cease and desist’ letters to producers to refrain from developing flare gas utilisation projects; and not jeopardise the flare profile earmarked for the NGFCP.
“Please be informed that this directive subsists and the commission would not entertain any ploy to frustrate awardees, the efforts of the commission, or the Nigerian government for that matter.
“The commission has provided opportunities for producers to make inputs into the draft commercial agreements. These inputs alongside those of other key stakeholders have already been incorporated into the template.
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“Particularly for the connection agreement between the producer/ awardee, it is expected that discussions on execution should be at an advanced stage based on the issued template,” Komolafe added.
Regarding the granting of access to flare sites, Mr. Gbenga Komolafe, the Chief Executive of NUPRC, emphasized that producers have a responsibility to provide access to data and facilitate site visits for awardees in accordance with industry-accepted safety protocols. He argued that the provision of additional information would enhance the awardees’ efforts in implementing their projects.
“It is therefore surprising to receive feedback from awardees on claims by some producers that the forecasted gas volumes may not be available, only a few months after.
“The commission will not accept any ploy to dissuade the awardees from embarking on their project development and may activate the relevant provisions of the Act and regulations to address wilful misrepresentation of information and data,” he pointed out.
Awardees have reported several challenges, including concerns about the assurance of flare gas supply, access to land and community support, delays in executing agreements due to extended due diligence processes, and reluctance to sign connection agreements with awardees, according to Mr. Gbenga Komolafe.
Despite these challenges, Komolafe reiterated his commitment, stating that the Nigerian Gas Flare Commercialisation Programme (NGFCP) is intended to be a “win-win” for all parties involved.
‘’The global pressure on oil & gas to combat emissions and decarbonize amidst climate and environmental activism should represent an added reason to leverage the NGFCP as a quick-win solution to address flaring,” he stressed.
Mr. Gbenga Komolafe outlined the benefits of the program for producers, emphasizing that it will aid upstream operators in addressing safety and environmental concerns, thereby supporting their social license to operate.
Additionally, he stated that the program aligns with the federal government’s objectives to enhance gas penetration and facilitate the use of Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) for domestic and vehicular purposes.
However, Komolafe acknowledged the concerns raised by producers, including apprehensions about safety, protection of assets and personnel, potential impacts on upstream operations, prior investments in flare gas capture, awardee technical and financial capacity, and the termination of flare payment obligations on producers.
While recognizing the gravity of these concerns, he assured that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will not compromise on safety, the integrity of assets, or jeopardize Nigeria’s oil production.
