Nigerian Oil and Gas Sector: Regulations and Incentives

LAGOS (Capital Markets in Africa) – Nigeria is currently facing significant challenges in its petroleum industry because of the volatility of oil prices1, pipeline vandalism and illegal refining. 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. Moreover, the backbone of this framework, the Petroleum Act of 1969, failed to provide for the sustained development of Nigeria’s gas resources. These factors necessitated an overhaul of the petroleum regulatory framework and the advancement of incentives to promote investment and operations in the industry.

The National Gas and Petroleum Policies were formulated in conjunction with new legislation to overhaul the Nigerian petroleum industry and initiate multi-sector economic growth, by addressing a broad range of issues such as sector governance, institutional framework, the fiscal regime, the need for a separate gas industry, the corporate structure of state-owned enterprises, transparency, accountability and environmental issues.

It is however important to note, when considering the emergence of new regulations in the Nigerian petroleum industry, that regulatory advancement in that sector is decidedly sluggish. This is evidenced by the fact that the Petroleum Industry Bill (‘PIB’), an omnibus law meant to regulate the entire sphere of the oil and gas industry by consolidating and repealing all extant petroleum legislation in Nigeria, has remained stagnant since its initial proposal before the National Assembly in 2008. It was eventually fragmented into the Petroleum Industry Governance Bill (‘Governance Bill’), the Petroleum Industry Fiscal Bill (‘Fiscal Bill’), the Petroleum Host Community Bill (‘Host Community Bill’) and the Petroleum Industry Administration Bill (‘Administration Bill’).

An extract from Bouncing Back: African Oil and Gas. Please download by clicking: INTO AFRICA PUBLICATION: MAY 2018 EDITION.

Contributor’s Profile
Ona Okwesa is an Associate at Ukiri Lijadu with extensive experience in providing the firm’s clients with innovative solutions and advice on various aspects of corporate and commercial law, including oil and gas law, power and energy law, regulatory compliance issues and commercial dispute resolution. She has a law degree from the University of Nottingham and a master’s degree in Oil and Gas law from the Aberdeen Business School, RGU. She is also an active member of the Association of International Petroleum Negotiators and the Chartered Institute of Arbitrators.

Obaro Obukohwo is a lawyer, who graduated from University of Lagos in 2015. He was called to the Nigerian Bar in 2016 and joined the Law Firm of Ukiri Lijadu in 2018. He is experienced in civil litigation and procedure and is currently gaining experience in corporate and commercial law.