The Nigerian Upstream Regulatory Commission, (NUPRC), has moved to ease funding challenges faced by Nigerian companies that won 57 marginal fields in June last year.
Development of the fields has stalled following the inability of the companies to raise the needed capital.
The Commission Chief Executive, Engr. Gbenga Komolafe in a Press Release yesterday, Tuesday, March 14, 2023, the new arrangement would be a production-based lending framework.
Engr. Komolafe explained that the arrangement which will involve the regulator, Petroleum Production Licence, PPL, Awardees, Exploration and Production (E&P) service providers and Nigerian Banks, would be offered on service fee recoverable by the service providers from production to be attached.
He said: “In recognition of the funding challenges facing some of the awardees of the 2020 Marginal Field Bid Round licences, the NUPRC is planning a production based lending engagement that will help them source needed capital to commence full field development towards hitting first oil.
“The engagement which is planned to commence soon will be between the Commission, Petroleum Production Licence (PPL) Awardees, Exploration and Production (E&P) service providers and Nigerian Banks. It is to provide platforms for strategic partnership/alliance between the awardees and the service providers for Well Re-entry and drilling services. The arrangement is to be offered on service fee recoverable by the service providers from production to be attached”.
He disclosed that the Commission has already concluded plans to organise an E&P International Financing Road show in Abuja in the coming weeks for financiers, investment bankers, private equities, and multi-lateral institutional investors.
“The initiative is to showcase the high value quick win opportunities available to investors in the recent PPL awards, the on-going National Gas Flare Commercialization Programme, as well as the on-going Mini-bid awards”, he added.
Komolafe noted that to also “ease the challenges thrown up by the initial corporate governance issues that arose before the inauguration of the Petroleum Industry Act (2021), the Commission has developed a Corporate Governance Framework for upstream petroleum operations. The framework is currently at an advanced stage of internal review and stakeholder engagements required for its finalization.
This is to enhance sustainability, environmental and corporate governance requirements and to facilitate capital attraction by investors for the optimal and efficient development of the PPLs and other assets.
“To facilitate dynamic data gathering and accelerate the achievement of ‘first oil’, the Commission initiated the revision of the subsisting Extended Well Test (EWT) Guideline to enhance early cash flow and speed up the journey to first oil. The strategy has already yielded positive results with 16 companies submitting Field Development Plan (FDP), two already commencing unitization processes, six re-entries and two having gone through the EWT”.
The Commission had in June last year handed over 57 oil fields located onshore and swamps of the Niger Delta to local oil companies with a charge on them to quickly develop the fields and produce first oil.
Matrix Energy, Ardova Oil, Suntrust Oil, Energia Ltd and Mainland Oil were among the companies awarded the Petroleum Prospecting Licence, PPL, and given at most six years to develop the fields and produce.
