Oil and gas operators get 4 weeks to submit project costs

25 November 2015, Lagos — Industry regulator, the Department of Petroleum Resources, DPR, has issued a four-week deadline for oil and gas operators to furnish it with the cost components of projects currently under execution in the country.

Modecai Ladan,

Mordecai Ladan, Director, DPR

This follows DPR’s establishment of “a mechanism to monitor and benchmark Nigerian oil and gas industry costs of projects and operations across the terrains and business arrangements.”

This comes as Nigeria’s daily crude oil production is down to 2.1 million barrels, as DPR initiates a National Production Monitoring System, NPMS, to monitor the country’s actual production volumes.

The development may not be unconnected with growing global fears on costs escalation in project execution, with Nigeria cited as having one of the highest project costs in the world,  which analysts blamed on improper oversight by regulators to monitor and evaluate costs.

To forestall companies falling foul, DPR, yesterday in Lagos, held a one-day strategic stakeholders interactive session on value monitoring and benchmarking of oil and gas projects and operations in Nigeria, to intimate them on the importance of compliance with the new directive.


Policy implementation

For effective and comprehensive implementation of the task, the Director, DPR, Mr. Modecai Ladan, told stakeholders that the regulator had already “circulated costs data gathering, CDG, templates to all operating companies in the industry after discussions with key stakeholders (FIRS and NAPIMS) on the subject.”

Ladan, who was represented by the Head, Planning, DPR, Mr. Alfred Ohiani, the CDG is meant “to close some gaps necessary to make the industry more transparent, efficient and accountable consistent with the agenda of the present administration.”

Expatiating further on the issue, Ohiani told Vanguard on the sidelines of the interactive session that the move became necessary because of the apparent lacuna witnessed in costs monitoring by the National Petroleum Investments Management Services, NAPIMS.

NAPIMS, a subsidiary of the Nigerian National Petroleum Corporation, NNPC, monitors project costs among joint venture, JV, production sharing contract, PSC, and service contract, SC, leaving out the sole risks and marginal fields operations.

However, with the DPR proposal, the sole risks and marginal fields operations will also be captured as well as the JVs, PSCs and Scs.

According to Ohiani, “being a government agency, we appreciate all they (NAPIMS) are doing; it’s just for us to leverage with them and from their experience begin to apply that for the sole risks and marginal fields on one hand, and also have an overview of what the costs are for the JV and PSCs.

“Therefore, when an investor asks, we can readily tell him the cost of a particular project in a particular area and why. This will help them to plan and determine what strategy to adopt to invest in a particular area.”

  • Vanguard
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