The petroleum industry in Nigeria
By Mohammed A. Abubakar, Partner.
“What a year!” This expression aptly describes the general reaction of people globally towards the realities of the year 2020. It was a year that was projected as a harbinger of hope for several countries and individuals. Yet it turned out to be a year that not only robbed many of their expectations but brought economies and activities to a standstill due to the Corona Virus Pandemic also known as the COVID-19.
Nigeria has not been immune to such expectations and dashed hopes. Yet, as characteristic of the nation and its people, resilience and fortitude has remained an intrinsic lace in the fabric of its existence. This is illustrated in the strides made with the Petroleum Industry Governance Bill (PIGB) despite COVID-19 and its attendant ills. History has it that Oil was discovered in Nigeria in 1956 at Oloibiri in the Niger Delta after half a century of exploration. To regulate the Oil and Gas Sector, multiple regulatory frameworks were put into place. The Petroleum Act is the principal statute that governs petroleum operations, including exploration, production and use. It vests ownership and control of all petroleum exclusively in the government and the exercise of the powers consequent on this title in the minister of petroleum resources. Qualified persons wishing to carry out any form of petroleum operations must be authorized by the Minister.
Others include the Oil Pipelines Act, the Oil and Gas Pipelines Regulations, the Deep Offshore and Inland Basin Production Sharing Contracts Act, the Nigerian National Petroleum Corporation Act and the Nigerian Oil and Gas Industry Content Development Act. However, despite the above regulatory framework, Nigeria is currently facing significant challenges in its petroleum industry. It is clear that the country must reduce its reliance on crude oil income by developing its midstream and downstream sectors and leveraging on its natural gas reserves. The existing petroleum regulatory framework however discourages investment in the sector and has proved to lack the requisite comprehensiveness to enable Nigeria achieve these outcomes. These factors necessitated an overhaul of the petroleum regulatory framework and the advancement of incentives to promote investment and operations in the industry. This seeded the idea behind the Petroleum Industry Governance Bill (PIGB). The Petroleum Industry Bill (PIB) is currently under legislative consideration having passed its second reading on 20th October 2020 and represents the most comprehensive review of the legal framework for the oil and gas sector in Nigeria since the industry began commercial operations in the 1960s. The Petroleum Industry Bill (PIB), an omnibus law is meant to regulate the entire sphere of the industry and repeal most existing oil and gas legislations.