Oil & Gas: Nigeria Sets New Standards in Acreage, Lease Administration
The Nigerian Government says it has set a new paradigm in acreage and lease administration in the oil and gas industry.
This is in line with the objective of the Petroleum Industry Act to optimise value from acreage management and administration and the new acreage allocation principles enunciated in the law.
The government disclosed this through its Nigerian Upstream Petroleum Regulatory Commission, explaining that the move was to adopt a more strategic approach in the administration of licenses and leases.
“To position the commission on a performance-centred paradigm for acreage management, a new strategy of acreage allocation, management and administration based on a holistic assessment of the prior performance of all licenses and leases awarded prior to the PIA is required,” the NUPRC said in a statement issued in Abuja.
The agency added that “the assessment would seek to identify the areas of regulatory underperformance in acreage management and administration leading to failure of licensees and lessees inability to carry out licence and lease performance obligations, including acquisition of data, drilling of wells and maturing of identified leads and prospects within the licence or lease span.”
In a memo to senior management staff of the commission, the Chief Executive Officer, NUPRC, Gbenga Komolafe, listed the aspects of the new strategy to include the review of assignee performance and contributions to licences and lessees; review compliance performance in reporting milestones by licensees and leasees; and the administration of regulatory consequence mechanisms.
Others included the review of loss allocation by licensees and lessees under the PIA, including production, cost and revenue, as well as the performance review of existing multi-client arrangements while streamlining ongoing activities to the PIA.
The assessment framework would require all existing licences and leasees to undergo a performance assessment audit of operation of licences and leases based on a framework to be developed by lease and focused on oil prospective leases, oil mining leases, marginal fields and multi-client arrangements.
“Evaluation is expected to cover the compliance with environmental requirements and with work programme commitments, compliance with revenue payment obligations and reporting obligations, audit of operation systems and third-party provider activities and assessment of assignee roles and performance obligations,” the commission stated.
It added, “In the new dispensation, there would be need for a team with representation from relevant departments to achieve performance schematic of existing licences and leases; identify oversight weakness, identify licencee and lessee centred failures in regulatory reporting requirements and other performance indices.
“Others include improving oversight mechanism in line with the objective of the PIA and aspects of new strategy as well as developing fresh Standard Operating Procedures for acreage management and leasing administration in line with the PIA.”
The commission stated that the team would be made up of a member, each from exploration, acreage management, development and production.
It said the team would also have members from the health, safety, environment and community, economic regulation, strategic planning and legal secretary departments, and was expected to submit a final report by August 30, 2022.