To Boost Investment, NUPRC Slashes Signature Bonuses for Oil Blocks to $10m for Deepwater, $7m for Shallow Water

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has cut  the bonuses payable by awardees in the 2022 and 2024 bid rounds to a maximum of $10 million for deepwater assets and $7 million for shallow water and onshore assets.

This followed the approval of its request for reduction of signature bonuses for oil blocks by President Bola Tinubu, who also doubles as the minister of petroleum.

The Assistant Director, Multiclient Surveys/Regional Studies, NUPRC, Mr. Ahmad Abdullahi, disclosed this on Tuesday in Lagos at the Pre-bid Conference for 2024 Oil Licensing Round.

He spoke just the Chief Executive Officer of the Commission, Mr. Gbenga Komolafe revealed that the commission has added more blocks to the 12 that are being auctioned, saying the number and details of the new blocks would be posted on the designated bid exercise portal later.

Komolafe also countered the recent claim by global Chief Executive Officer of TotalEnergies, Patrick Pouyanne that there was lack of talents in Nigeria, saying if there were no talents in the country, the French company and other International Oil Companies (IOCs) operating in the country would not be making profits as shown by their records.

Pouyanne, while speaking at the Africa Annual CEO Summit in Kigali, Rwanda, in May, asserted that Nigerians generally love to debate without having productive conclusions, saying those who take decisions on behalf of the Nigerian government should learn to agree on consistent frameworks for operations.

However, Komolafe revealed that the commission, in partnership with its multi-client partners, had acquired more geological data resulting in the identification of more prospective blocks.

 He said the newly identified blocks would be added to the pool of blocks originally scheduled for the bid exercise, and that their details would be made available on the bid round portal.

 “In addition to these blocks, the seven deep offshore blocks from the 2022 Mini-Bid Round Exercise which cover an area of approximately 6,700 km2 in water depths of 1,150m to 3,100m shall also be concluded along with this Licensing round.

“To ensure the seamlessness of the Licensing Round exercise, the NUPRC, in collaboration with our National Data Repository and multi-client partners, guarantee access to comprehensive and high-quality geological data, facilitating informed decision-making and strategic investments”, he stated.

He assured industry players and investors present at the conference that the licensing round was expected to be a huge success for Nigeria and a big step towards growing the nation’s oil and gas reserves.

He noted that this would be done through aggressive exploration and development efforts, boosting production, expanding opportunities for gas utilisation and end to end development across the value chain.

Additionally, he said the exercise was targeted at strengthening Nigeria’s  energy security and economy, providing an occasion to gainfully engage the pool of competent companies in the oil and gas sector with multiplier effect in employment opportunities, enabling transfer of technology, value optimisation from the  petroleum assets and attracting investments.

On the global scale, he said the licensing round would be beneficial to all stakeholders and would in the long run contribute to long-term global energy sufficiency.

 Komolafe explained: “The oil and gas industry in Nigeria has embraced the reality of energy transition and is taking strategic position to leverage on the opportunities presented by the unfolding era.

“However, it is worthy to recognise that recent events around the globe indicate that fossil fuels will continue to be a core part of the global energy mix well into the future, even beyond the set 2050 targets for achieving net-zero carbon emission.”

The Commission Chief Executive mentioned that a review of Welligence Energy Analytics reports on licensing rounds across the globe including Brazil, Guyana, Angola, Middle East, North Africa, SouthEast Asia among others  revealed that the era of huge front-loaded signature bonuses was over.

Accordingly, he said the government has proactively and intuitively vacated barriers to entry for investment in exploration blocks being offered, in both the 2022 deep offshore bid round and the 2024 licensing round, in line with international best practices. 

He said the 2024 Block Licensing Round was scheduled to last for approximately nine months, urging all interested parties to visit the dedicated NUPRC portal for bidding information

Komolafe assured that the 2024 Block Licencing Round was not merely a transactional opportunity but a testament to Nigeria’s commitment to advancing a resilient and sustainable Industry.

He also revealed that some persons from certain quarters were writing petitions against him and the commission and calling for their probe for trying to reduce the signature bonus on oil blocks.

“Some quarters are already saying: ‘probe the NUPRC, probe the CCE, they are trying to give our blocks free of charge to themselves.’  People are already writing petitions against the CCE, that how could the CCE or the commission be reducing the signature bonus?” he said.

He said NUPRC enjoys the support of the president who he described as a business enabler who had told the world that Nigeria was ready for business, noting that reforms and incentives introduced by the government would help attract investments into the oil and gas industry.

Komolafe explained that the decision to reduce the signature bonus was s driven by data, having  seen what other countries have done.

According to him, Brazil alone dropped signature bonus by almost 90 per cent just to attract investments, adding that in 2023, the country’s signature bonus was as high as $690 million, but has dropped to about $43 million.

He explained, “So, if for us as Nigeria, we still remain signature bonus at about $100 million and all that, and particularly, that is what is responsible for the fact that people use their political minds and financial muscles to get awards and they get the awards and they don’t do anything with it, they keep hawking it.

“So, we have moved courageously from that era, and now, we want to do business as it is supposed to be done properly. So, what we are trying to do is to move in tandem with the global order, the best practices, so that we get better results.

“Of course, you are all aware that Mr. President recently introduced incentives, a number of measures to attract more investments into the sector.”

He admitted that there were still some teething problems in the sector, but that the authorities were rising up to the responsibility to address the problems.

Emmanuel Addeh and Peter Uzoho

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