Nigeria’s oil production is currently lower than its technical allowable capacity by about one million barrels per day, the Federal Government announced on Wednesday.
It attributed the low oil output to challenges such as lack of investments, insecurity, and reduction in hydrocarbon funding arising from energy transition, among others.
The government disclosed this through the Nigerian Upstream Petroleum Regulatory Commission at the host communities sensitization workshop with the theme, “The Implementation of The Host Communities Development Trust,” held in Abuja.
“While the commission is prioritizing efforts towards increasing oil and gas production and ensuring maximum federation revenue through the optimization of the oil and gas value chain, the efforts have been constrained by a myriad of challenges.
“These challenges range from insecurity, low investment, and de-prioritization of funding of hydrocarbon development arising from the energy transition. Currently, Nigeria has the technical allowable capacity to produce about 2.5 million barrels of oil per day. However, arising from the highlighted challenges, our current production hovers around 1.5 million barrels of oil and condensate per day,” the Chief Executive, of NUPRC, Gbenga Komolafe, stated.
Komolafe, who was represented by the Commissioner, of Economy, Regulatory and Strategic Planning, NUPRC, Kelechi Ofoegbu, said the workshop would create awareness and provide a platform for knowledge sharing on the implementation of the host community provisions in the Petroleum Industry Act 2021.
He said the implementation of the provisions would be in a manner that would impact positively on the people of the Niger Delta and other oil and gas host communities.
“Our objective in this workshop is to create further awareness of this very important piece of legislation and provide updates on the commission’s activities geared towards the implementation of the regulations for Nigeria’s oil and gas industry.
“It is to provide a clear roadmap for the implementation of the Host Communities Development Trust to enhance peaceful and harmonious co-existence between oil and gas industry operators and host communities, and ultimately support the development of host communities,” the NUPRC boss stated.
He explained that to further stem the tide of sabotage and third-party interferences on oil and gas critical infrastructure, the PIA had in effect domesticated the protection of our oil and gas infrastructure to the host communities.
“One critical milestone under the PIA is the incorporation of Host Communities Development Trust by the settlor provided for in Section 235 as well appointment of Board of Trustees by the settlor in consultation with the host communities. The settlers are the oil and gas companies operating within host communities.
“Section 240 (2) of the PIA stipulates that each settlor, where applicable through the operator, shall make an annual contribution to the applicable host communities development trust fund of an amount equal to three percent of its actual annual operating expenses of the preceding financial year in the upstream petroleum operations affecting the host communities for which the applicable host community’s development trust fund was established.
“In addition, Section 247 of the Act requires the Board of Trustees to set up a management committee which shall be responsible for the general administration of the Host Communities Development Trust Fund,” Komolafe explained.
He further told chiefs of host communities and other participants at the workshop that so far, the commission had approved 75 Host Community Development Trusts, out of which 41 have been fully incorporated by the Corporate Affairs Commission.
“We have also pre-qualified a total of 19 fund managers and commenced the process of establishing a baseline of ongoing community development projects, in preparation for ensuring the migration of such into the HCDTs.
“In addition, the commission has in partnership with an OEM (Original Equipment Manufacturer) developed an industry intelligent, digital automated platform for reporting and monitoring the Host Community Development Trust for transparent administration of the HostCom provisions of the PIA,” Komolafe stated.
He said the portal had been designed to meet specific requirements of HCDT as enshrined in the PIA and would aid all stakeholders, including the settlors, Board of Trustees, management committees, advisory committees, fund managers, etc, to fulfill their obligations to host communities and promote accountability and transparency in the management of the HCDT program.
“The portal will also enable quick feedback from the stakeholders and the public for the commission to carry out its regulatory oversight effectively,” the NUPRC executive stated.
