Cost, Confidence and Crude: Can NUPRC-NNPC Alignment Reset Nigeria’s Upstream?

By Naija Enquirer Staff

Nigeria’s upstream oil and gas sector may be on the cusp of a quiet but consequential reset, following renewed alignment between the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian National Petroleum Company Limited (NNPCL).

The relationship between the two institutions is widely seen as critical to whether the Petroleum Industry Act (PIA) delivers its long-promised dividends, particularly in an environment where investor confidence has been weakened by regulatory fragmentation, high operating costs, and persistent production disruptions.

At a strategic meeting held recently at the NUPRC headquarters in Abuja, both institutions signalled a shared commitment to reducing operational costs, improving efficiency, restoring investor confidence, and attracting new capital into the upstream sector.

NUPRC and NNPCL: Regulator and Operator

The NUPRC is the government’s regulatory authority responsible for licensing, monitoring, and enforcing compliance across Nigeria’s upstream oil and gas industry.

Its responsibilities include ensuring operational transparency, enforcing measurement and hydrocarbon accounting standards, and supporting the implementation of the Host Community Development Trust (HCDT) framework introduced under the PIA.

NNPC Ltd, on the other hand, operates commercially under the PIA, managing Nigeria’s oil and gas assets while delivering strategic projects in exploration, production, and gas infrastructure development.

With regulatory clarity and operational efficiency closely linked, industry analysts say the relationship between NUPRC and NNPC remains pivotal to the long-term competitiveness of Nigeria’s upstream sector.

A Regulator and Operator Re-Align

For years, investors have cited Nigeria’s rising upstream costs, regulatory overlaps, and strained regulator–operator relationships as major structural obstacles to sustainable investment.

The recent meeting at the NUPRC headquarters signals a renewed effort to recalibrate that dynamic.

Commission Chief Executive of NUPRC, Mrs. Oritsemeyiwa Eyesan, described the engagement as a moment of institutional convergence rather than rivalry.

“As major instruments of the government in the industry, we are aligned toward the same goal and I think this is pivotal, and we must not lose this golden opportunity,” Eyesan said.

Her remarks underscored a key message of the PIA: the regulator and the national oil company must work collaboratively to drive production growth, stabilise the operating environment, and attract fresh investment into the sector.

The Cost Problem at the Heart of Nigeria’s Upstream

Central to the discussions was Nigeria’s long-standing challenge of high upstream operational costs, which has reduced competitiveness against peer oil-producing countries in Africa and beyond.

Eyesan disclosed that the Commission is working with industry groups, including the Oil Producers Trade Section (OPTS), to address the multiplicity of fees and rents imposed on operators.

“We are working with the industry on harmonizing the fees and rents that we charge. The whole idea is to harmonise and reduce it to the barest minimum so that we can reduce the cost of operations,” she said.

Analysts note that for investors considering multi-billion-dollar upstream commitments, cost predictability and regulatory stability often weigh as heavily as geological potential.

They argue that meaningful reduction of fiscal and regulatory overheads could significantly improve Nigeria’s investment appeal and reposition the country for stronger upstream growth.

Metering, Data and the Politics of Transparency

The meeting also highlighted another key concern for investors and the government: accurate measurement and hydrocarbon accounting.

Revenue assurance, production credibility, and transparency in crude output reporting remain sensitive issues in Nigeria’s upstream sector.

Eyesan said the Commission is moving beyond audits toward full implementation of metering standards nationwide.

“We have done the first phase, which is to audit what we already have. The second phase, which will commence shortly, will be the real implementation of the metering standards, including a central data centre with standardized meters across all locations,” she stated.

Industry observers believe the move toward standardized metering and centralised data systems is not merely technical, but a strategic signal of improved accountability in an era of heightened scrutiny over oil revenue leakages.

Host Communities, Peace and Production Stability

Another pillar of the PIA reforms discussed was the Host Community Development Trust (HCDT) framework, which is designed to address longstanding tension between oil operators and producing communities.

While acknowledging progress, Eyesan stressed that sustainable peace will depend on whether HCDT resources are properly utilised.

She noted that effective deployment of trust funds could improve community relations, reduce production disruptions, and strengthen operational stability in sensitive production corridors.

NNPC’s Commercial Mandate Meets Regulation

Operating commercially under the PIA has sharpened NNPC Ltd’s focus on regulatory efficiency and cost discipline.

Group Chief Executive Officer of NNPC Ltd, Engr. Bayo Ojulari, emphasised the interdependence between the national oil company and the regulator.

“As the national energy company operating commercially under the Petroleum Industry Act, our success is intertwined with the regulatory stewardship, which we are confident will be taken to the next level,” Ojulari said.

He also commended Eyesan’s leadership, describing her reputation as a confidence booster for the sector.

“Your antecedents, your track record, your integrity and your clarity excite the industry,” he added.

Gas as the Next Growth Frontier

Ojulari used the meeting to highlight NNPC’s commitment to the National Gas Master Plan, describing gas as a major pillar of Nigeria’s energy security and industrial transition strategy.

He cited progress on critical gas infrastructure projects, including the OB3 Gas Pipeline and the Ajaokuta–Kaduna–Kano (AKK) Gas Pipeline, which he described as enablers of domestic gas utilisation and long-term economic growth.

However, he cautioned that gas ambitions, like oil production growth, would remain constrained without a deliberate push to reduce the cost of doing business.

“There is a need to reduce the cost of operation in Nigeria to attract investments and boost energy security, and this cannot be achieved without the NUPRC’s regulatory role,” he said.

Licensing Rounds and the Search for Capital

Eyesan encouraged NNPC Ltd to deepen exploration by participating actively in the 2025 licensing round, as Nigeria seeks to replenish reserves and sustain production capacity.

With global capital becoming more selective, analysts say the success of future licensing rounds will depend less on the availability of acreage and more on Nigeria’s ability to demonstrate regulatory coherence, cost discipline, transparency, and certainty of execution.

The Test Ahead

While the Abuja meeting produced strong rhetoric and a clear sense of shared priorities, the real test lies in implementation.

Industry watchers say the renewed alignment between NUPRC and NNPC could represent a turning point in Nigeria’s upstream trajectory, translating PIA reforms into bankable outcomes.

However, they warn that without visible results, it could also become another well-intentioned engagement undermined by execution gaps.

For now, the message to investors is clear: Nigeria wants to compete again on cost, clarity, and confidence.

Whether the sector can deliver on that promise will shape the future of Nigeria’s oil and gas industry in the years ahead.