Komolafe has received several complaints of producers refusing to engage awardees.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Monday warned players in the oil and gas industry against frustrating the Nigerian Gas Flare Commercialisation Programme (NGFCP) which aims to achieve zero routine burning of gas in the country.
The Chief Executive of NUPRC, Mr Gbenga Komolafe, during a meeting with chief executives of producers operating assets under the NGFCP in Abuja, stated that the programme must not be allowed to fail, given the local and international attention it has attracted.
Komolafe stated that he had received several complaints of the producers refusing to engage the gas flare commercialisation awardees, stating that the full provisions of the Petroleum Industry Act (PIA) will be brought to bear on such individuals or entities.
The commission had earlier issued relevant letters of awards to 42 individual companies for all 49 flare sites on offer. The flare sites represented locations that are within the operating areas of 15 companies present at the engagement.
Whereas the commission had received some encouraging feedback on support by some producers, Komolafe stated that many awardees were decrying the lack of engagement by producers, contrary to the spirit of the programme and an earlier letter to them.
According to him, the executive session was convened to keep the stakeholders abreast of what he described as the “critical stage” of the NGFCP and the need to progress the project implementation with the urgency required.
“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 revocation of licenses or leases,” he stated.
However, he assured that the commission recognised the producers as critical stakeholders and was counting on their support toward achieving the NGFCP project execution.
Stressing that the programme had attained the critical milestone of the award of preferred bidders status, he solicited the support for the programme towards the issuance of permits and execution of projects.
On key issues of concern from the awardees’ perspectives, Komolafe stated that while the matters were being resolved, all hands must be on deck to ensure that timelines are met.
“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 that of other key stakeholders have already been incorporated in the template.
“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.
On granting of access to flare sites, the NUPRC chief executive insisted that producers are obliged to grant data access and enable awardees undertake site visits in line with industry acceptable safety protocols.
Provision of additional information, he argued, will enrich the awardees’ project implementation efforts.
“It is therefore surprising to receive feedback from awardees on claims by some producers that the forecasted gas volumes may not be available, only 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.
Other challenges that had been registered by awardees, he said, 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.Notwithstanding, Komolafe maintained that the NGFCP will be a “win-win” for all.
‘’The global pressure on oil & gas to combat emissions and decarbonise amidst climate and environmental activism should represent added reason to leverage the NGFCP as a quick-win solution to address flaring,” he stressed.
He listed the advantages of the programme to producers as helping to ensure that upstream operators address safety/environmental concerns and support their social license to operate.
He said that it will also support the federal government’s drive to deepen gas penetration and enable use of Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) for domestic and vehicular use, among others.
Komolafe also highlighted the concerns of producers, who are apprehensive about safety concerns – protection of producers’ assets and personnel as well as facilities, if infrastructure/technology is deployed on their sites.
He listed others as 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.
While recognising the seriousness of the above concerns by producers, he assured that the commission will not sacrifice the safety of the people, integrity of assets or jeopardise Nigeria’s fledging oil production.