Forty-two indigenous oil and gas companies have emerged winners of 49 flare sites in the 2022 Nigerian Gas Flare Commercialisation Programme (NGFCP) bid process, the first of such in the history of hydrocarbon exploration and production in the country. Nigerian Upstream Petroleum Regulatory Commission (NUPRC) announced this in a statement issued on Wednesday.
NUPRC added that it had approved KPMG, a global network of professional firms, to partner with it in the implementation of the award to ensure a successful outcome.
The federal government launched NGFCP in December 2016, to involve third-party investors or off-takers in harnessing gas released as a by-product of oil production, a crucial part of the seven big wins of the administration for the oil and gas sector.
Launched by then Minister of State for Petroleum Resources, Dr. Ibe Kachukwu, NGFCP was intended to offer gas-for-sale by the government through a transparent and competitive bidding process, with a structure devised to provide project bankability for the flare gas buyers
The programme was one of the government’s initiatives to drive the attainment of zero routine gas flaring by 2035 and net zero emissions by 2060 in the country.
The Muhammadu Buhari government had disclosed that 226 companies had submitted bids before the project was suspended at the onset of the COVID-19 pandemic in 2020.
The programme was first superintended by the defunct Department of Petroleum Resources (DPR), which had announced the identification of the 49 flare sites in February 2020.
However, with the Petroleum Industry Act (PIA) coming into existence in August 2021, ending the existence of DPR and replacing it with the current NUPRC, the commission last October announced the relaunch of the gas commercialisation programme and opened bids.
NUPRC explained, yesterday, that the issuance of letters of award to 42 companies/entities deemed successful in the process was ongoing. It said the 42 successful bidders were awarded 49 flare sites put forward during the 2022 NGFCP auction process.
The Gbenga Komolafe-led commission further said 38 of the companies/entities had been awarded 40 flare sites for standalone single flare site development, while four were awarded nine sites to be developed as clusters.
The upstream regulator, however, said “Reserve bidders” status had also been accorded to some companies for the corresponding flare sites in case the preferred bidders failed to meet the terms and conditions stipulated in the RFP.
According to the commission, “Award letters are already being transmitted to the respective successful entities through the appropriate channels.
“The successful 42 winners emerged out of the 300 companies/entities that indicated interest in either revalidating their prequalification status as existing participants or submitting Statement of Qualification (SOQ) as new participants.
“In furtherance of its mandate in Section 7 (e) and Section 105 (2) of the Petroleum Industry Act (PIA), 2021, the commission, in the third quarter of 2022, restructured the NGFCP and re-launched the programme to align with the provisions of the PIA, as well as reflect prevailing economic and operational realities.”
NUPRC noted that the significant success recorded in the NGFCP bid process was due to a series of focused engagements with relevant stakeholders, including domestic investors, international development agencies, oil and gas producers, technology providers, and financial institutions during the intervening months.
The commission further explained, “The engagements by the commission were to galvanise and sustain interest in the programme, attract investments and stimulate participation by local and foreign entities.
“In response to the Request for Qualification (RFQ) issued in the fourth quarter of 2022, 300 companies/entities indicated interest in either revalidating their prequalification status as existing participants or submitting Statement of Qualification (SOQ) as new participants.
“Following the evaluation of SOQs, a total of 139 applicants were deemed successful and awarded the Qualified Applicant status.
“Subsequently, in the first quarter of 2023, the commission issued the Request for Proposal (RFP) to enable qualified applicants to put together their respective proposals for any of the 49 flare sites on offer.”
NUPRC also stated, “Eighty-eight entities, comprising individual companies and consortiums responded to the RFP and submitted a total of 137 proposals, each containing technical, commercial and financial documentation for one or more of the 49 flare sites for either standalone or cluster development.”
The regulator maintained that the proposals were duly evaluated by it and approval secured to announce 38 companies/entities as successful bidders for 40 sites for standalone single flare site developments and four companies/entities for nine sites to be developed as clusters.
However, it stated that some companies were also awarded Reserve Bidders status for the corresponding flare sites in case the Preferred Bidders failed to meet the terms and conditions contained in the RFP.
NUPRC said, “At this stage, the Preferred Bidders would individually proceed to execute the Suite of Commercial Agreements with relevant parties and effect payment of the prescribed award fees to enable the grant of Permit to Access Flare Gas by the commission.
“KPMG, a global network of professional firms, has been approved to partner with the commission in the implementation of the award to ensure successful outcome of the gas flare-out commercialisation process.
“The management congratulates the successful bidders and enjoins them to follow through with the final stages of the programme towards becoming Permit Holders and executors of viable projects that would harness flare gas for value creation.”
Emmanuel Addeh and Peter Uzoho