Analysis of NEITI 2021 Oil and Gas Industry Report Reveals NUPRC Did Not Adhere to Its Own Regulations
Key Highlights :
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) did not adhere to its own regulations while implementing the 2020/2021 marginal fields award, the Nigeria Extractive Industries Transparency Initiative (NEITI) had said. This was revealed in the latest NEITI 2021 Oil and Gas Industry Report.
According to the report, the NUPRC awarded marginal fields to some companies prior to payment of signature bonus by the firms. Furthermore, the upstream regulator of the oil sector accepted payment of signature bonus by companies that did not participate in the marginal fields award process.
NUPRC is responsible for providing the regulatory framework of various contracts in the upstream arm of the oil and gas industry in Nigeria, and also keeps a list of contracts and the type of contractual arrangements in a register. The operating contracts in the Nigeria oil and gas industry operational in year 2021 were the Joint Operating Agreements, Production Sharing Contracts, and Sole Risk. Others include Service Contracts, the Modified Carry Agreements, as well as Repayment Agreements.
The Nigerian National Petroleum Company Limited usually signs some of these agreements on behalf of the federation and has copies of the agreements entered on behalf of the federation.
Commenting on the Federal Government marginal field bid round, which was also a contract initiated in 2020, NEITI stated that in June 2020, a marginal field bid process involving 57 fields was announced under the guidelines set by the NUPRC (then Department of Petroleum Resources). It said the marginal field award process was managed through an electronic portal, adding that the NEITI 2021 oil sector report provided information about the process since it had been concluded.
“According to NUPRC, there were 665 applicants for the 2020 Marginal Field bid round. A total of 106 companies emerged from the process as the marginal field bid round awardees. “It should, however, be noted that only five companies had made payment of signature bonus based on 2021 audit information provided by NUPRC. “According to the commission’s regulation, all successful applicants whose names are in the Notice of Preferred Bidder Status ought to have made payment of signature bonus, prior to award. “It should be noted that four other companies whose names were not on the list of awardees paid signature bonus on 2020/2021 marginal fields award,” NEITI stated.
Therefore, it is evident that NUPRC did not adhere to its own regulations while implementing the 2020/2021 marginal fields award. This is a clear violation of the regulations set by the NUPRC and should be addressed in order to ensure accountability and transparency in the oil and gas sector. It is also important for the NUPRC to ensure that all companies adhere to the regulations set by the commission in order to promote a fair and competitive environment in the sector.
