It’s hard to believe that August 16, 2021, is now two years behind us, signifying the momentous occasion when the Petroleum Industry Act 2021 (“Act” or “PIA”) was enacted into law. Over the past two years, the industry has been navigating and adjusting to the new legislative landscape. While opinions on the progress achieved during this period may differ within the industry, one undeniable fact is the array of significant activities that have unfolded, leaving an indelible mark on the industry’s current trajectory.
As we observe the second anniversary of the Act, our attention now shifts to the novel activities spearheaded by the two industry regulators, the Nigerian Upstream Petroleum Regulatory Commission (“Commission”) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (“Authority”). These activities shed light on the evolving landscape of the petroleum industry in Nigeria.
A popular African proverb states, “When two elephants fight, it is the grass that suffers.” This analogy emphasizes the consequences of conflicts or disputes between powerful entities, where the weaker or less influential ones bear the brunt of the negative effects. In the case of Nigeria’s upstream petroleum industry, the powerful entities are represented by the Nigerian Upstream Petroleum Regulatory Commission (“NUPRC”) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (“NMDPRA”), while the weaker parties are the upstream companies regulated by them.
In recent months, these two entities have been engaged in a dispute over the authority to regulate terminal operations and the export of crude oil. This conflict stems from ambiguities in the Petroleum Industry Act (“PIA”). This paper traces the origins of the problem and proposes alternative approaches to the adversarial position taken by the regulators.
We are well into the second year of implementation of the Petroleum Industry Act 2021 (“Act”), and regulatory activities within the walls of the two regulators – the Nigerian Upstream Petroleum Regulatory Commission (“Commission”) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (“Authority”) (jointly referred to as the “Regulators”) have accelerated.
In our newsletter titled Implementing the Petroleum Industry Act 2021: One Year After, we considered some of the implementation activities that were undertaken within a year of the passage of the Act. In another newsletter, titled Critical Deadlines in the Petroleum Industry Act 2021, we examined some of the possible factors that may impact compliance with the relevant timelines for certain regulatory activities under the Act. As we approach another critical milestone in the implementation of the Act, this newsletter seeks to provide new implementation updates as well as key timelines that the industry must be aware of.
The Petroleum Industry Act 2021 (“PIA” or “Act”) introduced changes across the Nigerian petroleum industry, and one of such changes is the overhaul of the administration of marginal field assets. The Act set a deadline of 18 months (February 15, 2023) for the transition of the existing marginal field assets into the PIA terms and put an end to the regime which has hitherto enabled small and indigenous players to participate in the industry for about two decades. This article examines the transition mechanisms for this category of assets and what it portends for the industry operators.
The Petroleum Industry Act 2021 (PIA) provides timelines within which certain critical actions must be performed by holders of oil mining leases (OMLs) and oil prospecting licences (OPLs), awardees of marginal fields and settlors.
One year after the passage of the PIA, this article details the activities, relevant timelines (some of which have lapsed) & practical considerations, before opining on whether these timelines are realistic. This is done taking into consideration the relevance of the regulations and guidelines that are yet to be issued by both the Nigerian Upstream Petroleum Regulatory Commission (“NUPRC” or the “Commission”) and the Nigerian Midstream and Downstream Regulatory Authority (NMDPRA), which ought to provide guidance in complying with the PIA.
The apparently unending task of reforming Nigeria’s oil and gas industry which began in 2000 was finally laid to rest a year ago, when the President assented to the Petroleum Industry Act 2021 (“Act” or “PIA”) on August 16, 2021. The industry welcomed the new law with mixed feelings, many believed the Act should have been finalized twenty years earlier to protect the industry from decline.
Despite this mixed reaction, it was clear that the Act had come to stay, and it brought with it sweeping changes and reforms across the institutional, regulatory, environmental, and fiscal frameworks of the Nigerian oil and gas sector. As one would have expected the implementation of these reforms commenced almost immediately, albeit slowly.
On the first anniversary of the PIA, it is useful to take a examine some of the noteworthy events and reforms undertaken and what they mean for the industry.
The Nigerian Senate today, 7th of October 2021 confirmed the appointment of Idaere Gogo Ogan (Chairman); Farouk A. Ahmed (Chief Executive Officer); Abiodun Adeniji (Executive Director, Finance and Accounts); and Ogbugo Ukoha ( Executive Director, Distributions System, Storage and Retail Infrastructure) as members of the board of the Midstream and Downstream Regulatory Authority.
The Senate on Wednesday 6th October 2021, confirmed the appointment of Isa Ibrahim Modibbo – Chairman; Engr. Gbenga Komolafe – Chief Executive; Hassan Gambo – Executive Commissioner, Finance and Accounts; and Ms Rose Ndong – Executive Commissioner, Exploration and Acreage Management. The President is expected to appoint other non-executive members to the Board of the Commission, once the proposed amendment to the PIA is passed.
There are a number of tasks immediately before the Commission including – staffing the Commission appropriately; instituting change management; publishing draft regulations and guidelines; publishing the domestic base price for natural gas.
Since the passage of the Petroleum Industry Act (“PIA”) on August 16, 2021, several noteworthy developments have taken place, which we highlight below.
The Federal Government sets up PIA Implementation Committee
NNPC becomes a limited liability company
The President and Minister of Petroleum Resources constitutes board of the Regulatory Institutions
The President seeks to amend the PIA
The Federal Government sets up PIA Implementation Committee
On Thursday, 19th of August 2021, the Federal Government inaugurated the steering committee for the implementation of the PIA, headed by the Minister of State for Petroleum Resources, Chief Timipre Sylva. The implementation structure is made up of the Steering Committee to be supported by an Implementation Working Group/Coordinating Secretariat (“IWGCS”) for effective and timely implementation of the PIA during the transition to the new petroleum industry regime.