The 2022 Nigerian Gas Flare Commercialization Programme reached a milestone on Wednesday with the Federal Government issuing letters of award to 42 participating firms.
This announcement came via a statement from the Nigerian Upstream Petroleum Regulatory Commission, which is headquartered in Abuja.
The Nigerian Gas Flare Commercialization Programme is a strategic initiative aimed at curbing the longstanding problem of gas flaring in the country’s oil and gas industry.
Gas flaring not only contributes to environmental pollution but also represents a wasteful loss of valuable natural resources.
Therefore, the decision to award these letters underscores the government’s determination to transform this challenge into an opportunity for economic growth and sustainability.
The statement reads in part,
- “The NUPRC hereby announces the outcome of the bidding exercise and issuance of letters of award to 42 companies/entities deemed successful in the keenly contested bid for 49 flare sites put forward during the 2022 Nigerian Gas Flare Commercialisation Programme auction process.
- “38 of the companies/entities have been awarded 40 flare sites for standalone single flare site development, while four are awarded nine sites to be developed as clusters.
- “Reserve bidders’ status has also been accorded some companies for the corresponding flare sites in case the preferred bidders fail to meet the terms and conditions stipulated in the RFP (Request for Proposal).”
According to the NUPRC, the award letters are currently being sent to the successful entities through the appropriate channels.
Engagement with Key Stakeholders
During the third quarter of 2022, the NUPRC underwent a restructuring of the gas flare commercialization program and subsequently re-launched it.
This restructuring aimed to align the program with the newly enacted Petroleum Industry Act (PIA) and to better accommodate the current economic and operational conditions in Nigeria.
The commission attributed the considerable success achieved in the NGFCP bid process to a sequence of interactions and consultations with key stakeholders.
It said the stakeholders include domestic investors, international development agencies, oil and gas producers, technology providers and financial institutions.
- “The engagements by the commission were to galvanize and sustain interest in the programme, attract investments and stimulate participation by local and foreign entities,” the upstream oil sector regulator stated.
In addition, the commission observed that, following the Request for Qualification issued in the final quarter of the previous year, there was substantial interest from 300 companies/entities.
These entities expressed their intent to either revalidate their pre-qualification status as existing participants or submit a Statement of Qualification 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 to enable qualified applicants to put together their respective proposals for any of the 49 flare sites on offer.
- “88 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 NUPRC stated.
According to the commission, after a rigorous evaluation process, they were authorized to reveal that 38 companies/entities had secured successful bids for the development of 40 stand-alone single flare sites, while four companies/entities were successful for nine cluster site developments.
- “Some companies were also awarded reserve bidders status for the corresponding flare sites in case the preferred bidders fail to meet the terms and conditions contained in the RFP.
- “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,” it stated.
More insights
The upstream regulator has given its approval for KPMG, a global network of professional firms, to collaborate with the commission in executing the award. This partnership aims to guarantee the successful achievement of the gas flare-out commercialisation process.
The commission expressed its heartfelt congratulations to the accomplished bidders who had demonstrated their competence and expertise.
In addition to this commendation, the commission earnestly encouraged these successful individuals or entities to diligently proceed with the subsequent phases of the program.
This included fulfilling the necessary requirements and obligations to obtain permits, as well as assuming the responsibilities of executing sustainable and profitable projects.
These projects were specifically designed to leverage flare gas as a valuable resource, aiming to not only reduce waste but also generate economic value through their implementation.
