Upstream regulatory commission responsible for revising petroleum licenses and lease management procedure

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The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is taking a more strategic approach in the administration of crude oil exploration licenses and leases in the country.

This is consistent with the Petroleum Industry Act (PIA) objective of maximizing the value of acreage management and administration and the new acreage allocation principles set out in the Act.

Commission Director General Gbenga Komolafe, who made it known yesterday, said the assessment would seek to identify areas of regulatory underperformance in acreage management and administration leading to the inability of licensees licensees and lessees to fulfill license and lease performance obligations, including data acquisition, well drilling and maturing of identified leads and prospects within the term of the license or lease.

He said that to position the Commission on a performance-centric paradigm for acreage management, a new acreage allocation, management and administration strategy based on a holistic assessment of past performance of all licenses and leases granted before the PIA is required.

In a memo to Commission management staff, Komolafe listed aspects of the new strategy to include review of assignee performance and license and tenant contributions, review of compliance performance in reporting milestones by licensees and tenants and the administration of regulatory consequence mechanisms, reviewing allocation of losses by licensees and tenants under the PIA, including production, costs and revenues, and reviewing the performance of existing multi-client agreements and streamlining ongoing activities towards the PIA.

The assessment framework would require all existing licenses and tenants to undergo a license and lease operation performance assessment audit based on a framework to be developed by Lease and focused on OPLs. , OMLs, marginal fields and multi-client agreements. The assessment should cover the following:

  • Compliance with environmental requirements and work program commitments, compliance with revenue payment and reporting obligations, audit of operating systems and activities of third-party vendors, and assessment of assignee roles and performance obligations

In the new waiver, there would be a need for a team with representation from relevant departments to perform a performance map of existing licenses and leases; identify oversight weaknesses, identify licensee and tenant centric failures in regulatory reporting requirements and other performance indicators; improving the oversight mechanism in line with the purpose of the PIA and aspects of the new strategy, as well as developing new standard operating procedures (SOPs) for acreage management and lease administration in line with the PIA.

The team which will consist of one member each from exploration and land management: development and production; Health, Safety, Environment and Community; The Economic Regulation and Strategic Planning and Legal Secretariat Departments are expected to submit a final report by August 30, 2022.

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