NUPRC Issues Historic Petroleum Exploration License Under PIA

The Federal Government, through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), has achieved a significant milestone by granting its first petroleum exploration license under the Petroleum Industry Act (PIA) of 2021.

This groundbreaking development, reported by InfoStride News on October 12, marks a crucial step in the implementation of the PIA and demonstrates the government’s commitment to fostering growth and investment in the Nigerian oil and gas sector.

The inaugural Petroleum Exploration License was awarded to TGS-PetroData Offshore Services Limited, a company that has been actively involved in geophysical survey projects. The issuance of this license aligns with the provisions of Section 71 (1) – (10) of the PIA, signifying its legal and regulatory legitimacy.

Mr. Gbenga Komolafe, the Chief Executive of NUPRC, provided insights into the significance of this license issuance. He explained that the license was granted to facilitate the acquisition of approximately 56,000 square kilometers of 3D seismic and gravity data. This data acquisition project is a vital step towards attracting investment in the oil and gas sector and enhancing exploration activities.

Mr. Komolafe highlighted the importance of data in the oil and gas industry, emphasizing that it serves as the foundation for the auctioning of reserves, development, and revenue generation. The data acquired under the Petroleum Exploration License is not proprietary but is considered speculative/multi-client survey data, acquired in collaboration with the NUPRC. This data, in turn, authorizes TGS-PetroData Offshore to conduct non-exclusive petroleum exploration operations on a multi-client basis within the licensed area. Furthermore, exploration companies are permitted to utilize the acquired 3D seismic and gravity data for their operations.

This development is a testament to the government’s commitment to providing a conducive regulatory environment and attracting investment in the oil and gas sector. It sets the stage for increased exploration activities and offers opportunities for both domestic and international exploration companies to participate in the development of Nigeria’s vast oil and gas resources.

In a broader context, this achievement underscores the government’s efforts to implement the PIA effectively and create an environment that encourages growth and investment in the Nigerian oil and gas industry. It is a positive step towards realizing the PIA’s objectives of improving transparency, promoting investment, and ensuring sustainable development in the sector.

This significant milestone follows earlier achievements in the implementation of the PIA. As reported by InfoStride News, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) recently granted its first wholesale gas supply license under the PIA. This license authorized Ohuru Trading Limited, a local firm, to supply 500 million standard cubic feet of gas per day. Such actions demonstrate the government’s determination to drive progress in the Nigerian oil and gas sector, enhancing the country’s energy infrastructure and promoting economic growth.

Additionally, oil and gas operators in Nigeria have embarked on implementing the host communities’ development fund, aimed at benefiting local communities in areas where oil and gas assets are present. This initiative reflects a broader commitment to corporate social responsibility and sustainable development, ensuring that the benefits of the oil and gas sector are shared with the communities where operations are conducted.

The Punch report, cited in the InfoStride News article, also highlighted the remarkable increase in Nigeria’s oil drilling rigs. In 2022, there were only 10 oil drilling rigs in the country, but by August 2023, this number had surged to 31. This significant expansion of drilling operations has had a positive impact on crude oil output. As reported by InfoStride News, Nigeria achieved its highest level of crude oil production in September 2023, reaching 1.5 million liters. This increased production is a testament to the industry’s resurgence and the positive effects of regulatory and operational improvements.

Mr. Gbenga Komolafe, in his comments, provided valuable context to this increase in oil rigs. He noted that in the years leading up to the enactment of the PIA, investments in the Nigerian oil and gas industry had declined significantly. This decline was primarily due to regulatory uncertainty, reduced funding for fossil fuel development driven by the global energy transition, and the widespread call for decarbonization.

The increase in oil drilling rigs, therefore, signifies a turning point in the industry’s fortunes. It reflects the renewed confidence of investors and operators in the Nigerian oil and gas sector, driven by the clarity and stability provided by the PIA. This resurgence is pivotal in ensuring the industry’s growth, economic contribution, and long-term sustainability in a dynamic global energy landscape.

In conclusion, the issuance of the first Petroleum Exploration License under the PIA is a pivotal moment in the Nigerian oil and gas sector. It highlights the government’s commitment to fostering growth, attracting investment, and enhancing exploration activities. This development, along with other achievements under the PIA, underscores the government’s determination to create a conducive regulatory environment and promote sustainable development in the sector. With the increased number of oil drilling rigs and growing crude oil output, Nigeria is well-positioned to strengthen its position as a significant player in the global oil and gas industry.