Nigeria’s Marginal Fields: We Will Not Accept People Trading in Our Papers, Says NUPRC CEO Komolafe

Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Mr Gbenga Komolafe, has said under his leadership, no marginal field operator would be allowed to “trade” in papers issued by the organisation.

Komolafe, who spoke with the Africa Oil+Gas Report, stated that the rule of law would be strictly followed in the issuance of final licences to the winners, stating that no amount of pressure would make the commission award final documents without due process.

The NUPRC boss also spoke on the Addax issue. He disclosed that when he assumed office, he reviewed the file and observed that two extensions had been granted for payment, but the company could not come up with the money until the award lapsed.

Stating that the NUPRC “won’t be arbitrary”, Komolafe stressed that some of the 119 companies that had fully paid their bonuses were insisting that they could not raise funds without collecting the licences.

According to him, “In many cases the moment people get a letter of award, they write to say they want to assign. Assign what? There’s a phrase in law, frequently rendered in Latin: ‘Nemo dat quod non habet’.

“It means ‘You can’t give what you don’t have’. For you to get an award, you have to show the proof that you can pay the signature bonus and you can finance the field development.

“You get it only because you’ve met the requirements. Your award would have been consummated before you can talk of assignment. We shouldn’t be encouraging people making money by trading papers.

“It is better you have a regulator that abides by the rule of law than to have a genius as a regulator. If you have a judge in court and he decides to rule on the basis of his ingenuity, then, it becomes a ground for appeal.”

He added, “If you have such a judge, he is a problem judge; he would be abusing discretion. I am going to ensure that our rules and processes give effect to the law. Awards of acreages will be carried out on the basis of fairness, transparency and competitiveness.”

Komolafe, therefore, insisted that until the process was completed, no licences would be issued, stating all decisions would be taken based on strict adherence to the rules.

He said, “Anyone whose licence is revoked during my tenure will not have a space to challenge. We will take a decision such that everyone challenging it will be standing on very weak ground.

“Now, some of the 119 companies, who have fully paid their bonuses, have formed the required Special Purpose Vehicles (SPVs) to operate the assets.

“They are asking for their licences, without which, some say, they are neither able to raise the funds for their work programmes, nor start working relationship discussions with the oil majors, who operate the leases from which the marginal fields were ring fenced.”

Addressing the Addax issue, Komolafe said, “If you were granted an award, it is guided by the law of contract. If you don’t meet the terms, the award reverts to the original owner. It is now the obligation of the Nigerian National Petroleum Company (NNPC) to find a viable partner to operate the asset.”

He pledged that the federal government would pursue vigorously the gas flare commercialisation programme, promising, “I am going to rework, rejig it to finalise the work.”

Komolafe hoped that the process would be wrapped up before the end of the second quarter of 2022.

“In finalising the round, we will ensure fairness, transparency and competitiveness. We are going to ensure very effective regulation that will give effect to the finest spirit of competition,” he pledged.

Reiterating that NUPRC was in the process of developing regulations for the activation of the Petroleum Industry Act (PIA), the NUPRC helmsman noted that the law must be given effect by regulations.

He stated, “There will be public hearings of the regulator, just as you have public hearings for the law making, you must also have public hearings for the regulations of the law. You must have the stakeholders’ hearings.”

Komolafe explained that the PIA provided robustly for abandonment, host community and award of acreages, but argued that it could not be given effect until the entire process was consummated.

On how he intended to tackle the challenges, Komolafe said, “I came with a revolutionary mind-set. I am a unique person in the industry, going by my background. I intend to do things differently in terms of adhering to processes.”

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