At COP 28, NUPRC Unveils Regulatory Framework For Energy Transition, Carbon Monetisation

…Urges Investors To Leverage PIA Fiscal Incentives For Development Of Nigeria’s Energy Sector

The Nigeria Upstream Petroleum Regulatory Commission has unveiled the regulatory framework for energy transition, decarbonisation and carbon monetisation for upstream operations in Nigeria.

The NUPRC Chief Executive, Engr Gbenga Komolafe, unveiled the regulatory framework during a presentation at the Nigerian Pavilion, UN Climate Change Conference {COP 28} held in Dubai, the United Arab Emirates.

He spoke on the theme, “Driving sustainable upstream operations to achieve just and equitable energy transition.”

The COP 28 outlines four well-selected all-encompassing themes, namely: technology and innovation, inclusion, frontline communities, and finance.

Komolafe called on stakeholders, government agencies, operators, and international collaborators to join the Commission as it progresses the steady implementation of the Framework within the coming months.

This, he added, would be underpinned by Directives, Guidelines and Regulations.

He stated further that the implementation of the Regulatory Framework has already commenced on the heels of the issuance of the 2022 Guidelines for Management of Fugitive Methane and Greenhouse Gases Emissions in the Upstream Oil and Gas Operations in Nigeria.

Similarly, the NUPRC Boss added that the introduction of the Gas Flare, Venting & Methane (Prevention of Waste & Pollution) Regulations 2023 provides the renewed legislative basis to take firm actions on gas flaring, venting and fugitive emissions.

He told participants at the event that the NUPRC is focused in driving industry efficiency and sustainability based on the Petroleum Industry Act, 2021 (PIA) and in line with the Nigeria Energy Transition Plan.

He said, “Nigeria has set Nationally Determined Contributions (NDC) in support of 2030 emission reduction targets for which Nigeria is committed to unconditional reduction of 20 per cent and conditional reduction of 47 per cent with international support in the form of financing, technology transfer, and capacity building.

“Consequently, the Nigerian oil and gas emission reduction targets were set at 60 per cent reduction in fugitive methane emission by 2031 and zero gas flaring in 2030 as part of the ambitious transition path defined for achieving national climate neutrality by 2060.

“These mitigation measures have further been emphasised in the Nigeria’s Long-Term Low Emission Development Strategy, launched at this Conference by the National Council on Climate Change (NCCC).

“Whereas the global imperatives may be perceived to be driven primarily by climate and environmental actions, the impacts of energy geopolitics and global resource control cannot be overlooked.

“As the energy transition gains momentum, it should be stressed that, Nigeria is well resourced in the energy mix. The nation is blessed with potentials for green and blue hydrogen, solar, wind, biomass, and other renewable sources as well as the availability of critical minerals that support accessories for renewables and clean energy technologies. This underscores the immense potentials of Nigeria to contribute to the evolving global energy landscape for economic prosperity and sustainability.”

As the regulator and business enabler, Komolafe stated further that the NUPRC is leveraging the opportunity of rising global energy demand to position the Nigerian upstream sector for decarbonisation to meet national aspirations.

He stated, “The future we foresee for the petroleum industry is one that should assure for the utilization of Nigeria’s endowed natural hydrocarbon resources for shared prosperity, energy accessibility, sustainability, and security.

“Those are the cardinal pillars of the Nigeria Energy Transition Plan upon which basis the Nigerian Government declared natural gas as transition or bridge fuel. In the same vein, Government has initiated the Decade of Gas programme to actualise the objectives of unlocking investments required to grow gas production from an average of 7.0 bcfd in 2023 to 12 bcfd in 2030 to be driven by major projects such as NLNG Train 7 & 8, Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Project and the Nigeria – Morocco Gas Pipeline, and so forth.

“Based on projected gas demand, significant opportunities for participation exist for both existing investors and new entrants. It is our expectation that international investors would support Nigeria’s gas journey in its energy transition pathway.

“Similarly, we are implementing the green story in Field Development Plans (FDPs) to integrate decarbonisation measures and adherence to ESG principles in upstream development.”

He reiterated the attractive fiscal incentives in the Petroleum Industry Act and urged investors to leverage for energy infrastructure development.

The incentives include: zero-hydrocarbon tax for deep water developments, reduced royalty rates based on production and terrains, and tax consolidation provisions amongst others.

He said, “The Commission has intensified efforts towards eliminating flared gas while arresting methane and other fugitive gas emissions, by commercializing forty-nine flare sites through the Nigerian Gas Flare Commercialization Program (NGFCP).

“Further investment opportunities are also available in ongoing and future licencing rounds for oil and gas blocks, seismic acquisition on multiclient basis, development of deeper hydrocarbon opportunities, carbon markets, evacuation logistics, IT and surveillance infrastructure etc.

“Each of these areas provides a unique entry point for willing investors and are essential components of our national architecture for sustainable energy infrastructure development.

“This programme is a major platform for Nigeria to showcase its commitment towards zero emission by 2060. In this regard, as a Commission we are happy to showcase at this forum that significant progress has been recorded in the implementation of the NGFCP.

“With the emergence of Awardees, the successful entities are progressing towards the conclusion of commercial agreements and commencement of project execution. This is a major win in Nigeria’s energy transition pathway.

“Upon completion, we estimate a reduction of about 500 MMscfd of flare gas, representing 50 per cent of current flare disposition, which is equivalent 6 Million tonnes of CO2 emission per year.”

He further called on the investors, multilateral organisation, international financiers, technical service providers and partner entities to collaborate with the Commission and to enhance their support as flare-out projects are being consummated and developed.

To this end, he said the Commission is calling on all well-meaning Partners to deepen support for programme toward full value realization through technical support, financing & funding, collaboration for carbon credit earning framework as a major climate action for Nigeria and capacity building