The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has addressed concerns surrounding the awarding of oil blocks to a newly formed company, Panout Oil & Gas, during the 2024 oil licensing bid round. The Commission categorically denied any wrongdoing, emphasizing that the entire process adhered strictly to the Petroleum Industry Act (PIA) 2021 and its own established licensing guidelines. These guidelines, according to the NUPRC, prioritize transparency, competition, and technological advancement in the bidding process. The Commission further reiterated its commitment to promoting a fair and competitive environment that fosters investment and maximizes Nigeria’s hydrocarbon resources.
The primary contention arose from Panout Oil & Gas, a company incorporated merely eight days before the bid, securing two oil blocks, including one against major international players like TotalEnergies. Critics questioned the legality of awarding blocks to such a young company, suggesting potential violations of established regulations. However, the NUPRC Chief Executive, Gbenga Komolafe, clarified that the bid guidelines do not preclude participation based solely on a company’s age. He emphasized that the evaluation process focuses on a comprehensive assessment of technical expertise, financial stability, and legal compliance, factors not solely tied to the incorporation date.
Komolafe elaborated on the evaluation criteria, stating that the Commission considers the pedigree and proven track record of a company’s promoters, affiliated entities, and parent organizations, rather than solely relying on the age of the bidding entity itself. This approach acknowledges that newly formed “Special Purpose Vehicles” (SPVs) often leverage the experience and resources of established industry players. Therefore, the NUPRC’s evaluation method allows these SPVs to compete fairly and effectively alongside more established companies, ensuring that technical and financial capabilities are thoroughly vetted.
The 2024 Licensing Round involved a multi-stage evaluation process, encompassing pre-qualification, technical evaluation, and commercial bid evaluation. Each stage demanded rigorous documentation from applicants, including incorporation papers, tax clearances, and evidence of operational experience, thereby demonstrating financial strength, technical expertise, and legal adherence. Importantly, the pre-qualification stage did not impose restrictions on company age, providing equal opportunity for all eligible participants. The Commission maintained that the transparent process ensured that all companies, regardless of age, had an equal opportunity to demonstrate their capabilities.
The commercial bidding phase, a crucial element of the licensing round, was conducted digitally using encrypted technology, guaranteeing the integrity and confidentiality of the process. This technologically advanced approach was further enhanced by live televised sessions, enabling observation by stakeholders, including the Nigerian Extractive Industry Initiative (NEITI) and relevant government ministries, thereby ensuring transparency and accountability. The NUPRC stressed that the results were publicly announced, showcasing the openness of the entire bidding process. Furthermore, the commercial bid evaluation employed a transparent, digital, point-based assessment system, incorporating factors such as signature bonus, proposed work program financial commitments, and work performance security, all contributing to a comprehensive evaluation of each bid.
The NUPRC proudly highlighted the robust participation of indigenous oil companies, who successfully outbid several national and international players, demonstrating strong investor confidence following the implementation of the PIA 2021. This outcome underlines the effectiveness of the new regulatory framework in attracting investment and promoting local participation in the oil and gas sector. The Commission further emphasized that the Nigeria Extractive Industries Transparency Initiative (NEITI), an independent observer, commended the transparency and inclusivity of the entire process, validating the NUPRC’s commitment to a fair and open bidding round. The NUPRC underscored its dedication to adhering to statutory provisions and guidelines, rejecting any suggestions of discrimination or corrupt practices. The Commission remains steadfast in its commitment to transparent regulation, optimizing Nigeria’s hydrocarbon resources, and attracting investment under the current administration.
