The Senate has voiced concerns over the lack of funds for crude exploration and the development of acreages in the upstream oil sector.
As a result, it has summoned the management of the Nigerian National Petroleum Corporation Limited to provide explanations.
Chairman of the Senate Committee on Gas, Jarigbe Jarigbe, disclosed this on Friday after a closed-door meeting with the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, and his team.
It has come to light that with the passage of the Petroleum Industry Act, a Frontier Exploration Fund was established to support exploration and development in Nigeria’s frontier acreages. These include the Chad and Benue Basins, and Anambra, among others, where hydrocarbons have been discovered but exploration has not yet commenced. Some of these acreages have been classified as marginal fields by International Oil Companies (IOCs) in the upstream sector.
Further investigation reveals that the PIA provides for the Frontier Fund, which is approximately 30% of NNPC’s profit from oil and gas contracts, to finance exploration and development activities in these frontier acreages.
Chairman of the Senate Committee on Gas, however, expressed strong reservations about the NNPC’s failure to commit to the Frontier Fund, which he noted has been stripped of the corporation’s statutory contribution. He stated, “We received a briefing from the CEO of NUPRC and his team on the agency’s activities. Section 9, subsection 4 and 5, provides that the NUPRC should have a Frontier Acreages escrow account for the exploration and development of frontier acreages, and that fund is subject to the approval of the National Assembly.
Also, section 22, subsection 1 of the Petroleum Industry Act provides that the National Assembly oversees the budget and expenditure of the NUPRC. So, we had to interact with the commission on these issues and discovered that there is no fund raised from the 30 percent oil profit and 30 percent gas profit as provided for in Section 9, subsection 4 of the PIA.
We also intend to engage with the NNPC on that. We don’t know the budget because we weren’t given any figures. We will obtain details on that and provide updates,” Senator Jarigbe added.
The Senate Committee also expressed dissatisfaction with the lack of attention given to gas production, despite the abundant gas reserves in the country estimated at 208 trillion cubic feet. The Chief Executive Officer of NUPRC maintained that the corporation has been consistently working to harness the country’s gas resources to boost revenue generation.
“As a commission, we recognise the importance of gas to the nation, and in our regulatory activities, we are placing a critical focus on accelerating gas production in the country. The commission is currently identifying fields with undeveloped gas opportunities as part of an internal initiative. We intend to transparently auction those fields in line with the PIA and other provisions. We believe this exercise will help the nation effectively benefit from its gas reserves rather than just keeping them.”
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