LEGAL IDEAS FORUM

The Regulatory Framework for the oil and gas Industry in Nigeria

 

ABSTRACT 
 
Nigeria operates a command and control regulatory framework in the oil and gas sector.1 Under this framework, regulators are deemed to be acting in the public interests; however some factors such as red tape and inadequate law enforcement are militating against a whole scale governmental oversight of an industry that is the lifeblood of the Nigerian economy. This work seeks to examine and analyze the various laws, policies and regulations guiding the oil and gas industry in Nigeria, while bringing to the fore legal defects in the extant laws and proffering alternative solutions to these problems.
­
INTRODUCTION
This work focuses on the various policies on the oil and gas regime in Nigeria. Laws regulating the industry directly and other incidental laws and regulations will be analyzed. For clarity and coherence, the article will be divided into various sections:
  • Firstly, there will be an overview of the evolution of the Nigerian petroleum industry.

 

 
  • We shall then dwell on the ownership and control of the oil and gas resources in Nigeria.

 

 
  • The major regulatory agencies in Nigeria shall be listed.

 

 
  • An appraisal will be given to the various public regulations of the industry in Nigeria. Similarly,. 

 

 
  • legislative instruments such as the Constitution of The Federal Republic of Nigeria 1999, The Land Use Act, The Petroleum Act, Environmental Impact Assessment Act, Oil Pipelines Act, Act and Petroleum (Drilling and Production) Regulations, amongst others shall be discussed.

 

 
  • The laws regulating gas flaring in Nigeria shall be highlighted.

 

 
  • We  will also take a look at recent developments in the oil and gas industry such as the Petroleum Industry Bill and the Local Content Act.2
 

 

1. Evaristus Oshionebo: Transnational Corporation, Civil society and Social responsibility in Nigeria’s Oil and Gas Industry, 15 AFR. J. INT’L & COMP. L. 107-129 (2007).
 
2. Ekhator, Eghosa Osa (2016) “Public Regulation of Oil and Gas Industry in Nigeria: An Evaluation, “Annual Survey of International and Comparative Law: Vol 21: Iss 1, Article 6.
_______________

EVALUATION OF THE NIGERIAN PETROLEUM INDUSTRY 
The evolution of the petroleum industry in Nigeria will be treated from two perspectives; the historical evolution per se and the evolution of the ownership regime in the oil and gas sector.
With regards to the first perspective, a timeline is delineated below:
➢  1937 – This marked entry of the Royal Dutch Shell consortium; known as Shell D’Arcy.
➢ 1946 – Full operations commenced with the emergence of Shell BP (a merger of Shell D’Arcy and British Petroleum).
➢ 1956 – Crude oil was first struck at Oloibiri village in Bayelsa State Nigeria
➢ 1958- Nigeria became an ‘oil producing State’ (when it produced her first 5,100bpd).
➢ 1970- Nigeria reaped the reward of rise in oil prices.
➢ 1971- Nigeria joined the Organization of Petroleum Exporting Companies (OPEC).
➢ 1977- Nigeria established the Nigerian National Petroleum Corporation (NNPC).
Today, Nigeria’s reserve base is estimated at 25 billion barrels and is ranked the 6th largest crude oil producer in the world.
From 1973 – 2002, the following agreements were signed:
➢ The First Participation Agreement (whereby the Federal Government acquired 35% shares in the Oil Companies).
➢ The Second Participation Agreement (here the Federal Government increased its equity to 55%).
➢ Third Participation Agreement (through the NNPC, the Federal Government increased its equity to 60%).
➢   Fourth Participation Agreement.
➢  Fifty Participation Agreement (NNPC: 60%, Shell: 30%, Elf: 5%, Agip: 5%).
➢ Sixth Participation Agreement (NNPC: 55%, Shell: 30%, Elf: 10%, Agip: 5%).
➢ Agreement consolidating NNPC/Shell Joint Venture.
➢ Signing of Memorandum of Understanding & Joint Venture Operating Agreement (JOA).
➢    NPDC/NAOC Service Contract.
➢   Production Sharing Contracts signed –SNEPCO (Shell Nigeria Exploration and Production Company).
➢   2002 marked the liberalization of the downstream oil sector and NNPC commenced retail outlet scheme.3
 
3. Tolulope Aderemi: Legal, Regulatory & Commercial Framework of the Nigerian Oil and Gas Industry (2015).

______________

EVOLUTION OF THE OWNERSHIP REGIME IN THE OIL AND GAS SECTOR:
Nigeria is a federal state with three tiers of government: Federal, State and Local. Nigeria’s variant of federalism has been subject of numerous critiques and the subsisting view is that, the system is skewed to the advantage of the central or federal government. Some of the laws accentuating the federal or central government’s total control and ownership of mineral resources include the Constitution of Nigeria 1999, the Land Use Act, Petroleum Act, the Territorial Act, and the Exclusive Economic Zone Act, amongst others.
 
Section 44(3) of the 1999 Constitution vests in the federal government exclusive control and management of minerals, mineral oils and natural gas found in Nigeria.
The section states thus:

Notwithstanding the foregoing provisions of this section, the entire property in and control of all minerals, mineral oils and natural gas in under or upon any land in Nigeria or in, under or upon the territorial waters and the Exclusive Economic Zone of Nigeria shall vest in the Government of the Federation and shall be managed in such manner as may be prescribed by the National Assembly.

This constitutional provision is replicated in several legislations, including the Exclusive Economic Zone Act, the Minerals and Mining Act and the Land Use Act, amongst others. With the enactment of the Offshore Oil Revenue Decree in 1971, the totality of the federal government’s ownership and control of mineral resources in Nigeria was confirmed. The Offshore and Oil Decree Act abrogated the ownership rights of the states over mineral resources in their extant continental shelves, title to territorial waters and revenue (rents) accruing from the petroleum or oil and gas operations in such states. By virtue of this law, ownership and control of mineral resources were now vested in the federal government.
Furthermore, under the Constitution, the federal government’s list or schedule of exclusive powers contains all matters relating to the regulation and management of the oil and gas industry. These matters include export duties, mines and minerals (including oil fields, oil mining, geographical surveys and natural gas), incorporation and regulation of corporate bodies and taxation of profits, capital gains and incomes.
REGULATORY FRAMEWORK OF THE PETROLEUM INDUSTRY – MAJOR AGENCIES IN NIGERIA:
  • Ministry of Petroleum Resources (MPR) 
  • Department of Petroleum Resources (DPR) 
  • Nigerian Content Development and Monitoring Board (NCDMB) 
  • National Oil Spill Detection and Response Agency (NOSDRA) 
  • National Petroleum Investment Management Services (NAPIMS)
  • Petroleum Products Pricing Regulatory Agency (PPPRA)
  • Nigerian Content Division (NCD)
  • Federal Inland Revenue Service (FIRS).

 

LEGISLATIVE INSTRUMENTS REGULATORY THE OIL AND GAS INDUSTRY IN NIGERIA.
 
The Petroleum Act of 19694,  which is the first post-colonial law on the oil and gas sector defines ‘petroleum’ in Section 14 as “mineral oil (or any related hydrocarbon) or natural gas as it exists in its natural state in bituminous shales or other stratified deposits from which oil can be extracted by destructive distillation.” Also, Section 14 defines “natural gas” as gas obtained from boreholes and wells and consisting of hydrocarbons. By virtue of Section 1(1) of the Act, the “entire ownership and control of all petroleum in, under or upon any land in Nigeria is vested in the state,” that is, the federal government of Nigeria. By virtue of Section 1(2) of the Act, this provision is deemed to apply to all land (including land covered by water) which is in Nigeria, under the Nigerian territorial waters or forms part of the continental shelf or forms part of the Exclusive Economic Zone of Nigeria. Furthermore, by virtue of Section 2(1) of the Act, only Nigerian citizens or companies incorporated in Nigeria can validly partake in the oil and gas industry. Such participatory activities include oil exploration, drilling, production, storage, refining and transportation. Under Section 2 of the Act, companies can be granted various rights including oil exploration licenses to explore for petroleum, a prospecting license and an oil mining lease.
 
The Office of the Minster of Petroleum Resources in Nigeria is an important entity in the regulation of oil and gas industry by virtue of the Petroleum Act. The major feature of the Act is the mode of control exercised over the sector by the Minister of Petroleum Resources. Some of the powers of the Minister include the power to grant and revoke licenses and make regulations, amongst others.
 
The Petroleum Act contains procedures for the revocation of oil prospecting licenses (or oil mining licenses) by the Minister. Paragraph 23(1) (a) of Schedule 1 to the Petroleum Act states that the Minister may revoke any oil prospecting or mining license where the licensee or lease (Oil companies) becomes controlled ultimately or indirectly by a non-Nigerian or foreigner. Also, by virtue of Paragraph 24 of the Act, the Minister of Petroleum Resources can revoke oil licenses for the following reasons: if, in his opinion, the licensee or lessee (oil firms) are not conducting their operations or activities continuously, or not conducting their operations in business-like manner in accordance with requirements approved for the lessee and not conducting their activities in accordance with good oil field practices. Also, oil licenses can be revoked by the Minister by virtue of this paragraph if the oil firms (licensees and lessees) fail to adhere to the provisions of the Petroleum Act and other allied regulations or laws. 
 
Furthermore, oil prospecting or oil mining licenses can be revoked by the Minister if oil companies fail to pay their rent or royalties within the specified period and if they fail to submit reports on its operations or activities as the Minister may require of them. The powers of revocation of oil licenses vested in the Minister are provided in paragraphs 25-26 of Schedule 1 of the Petroleum Act. Paragraph 25 states that the Minister shall inform the licensee or lessee of the grounds on which the revocation is made or contemplated and shall invite the lessee or licensee to make any explanation if he so desires. Paragraph 26 posits that if the Minister is satisfied with the explanation given (by the licensee and lessee), he may invite the firms to rectify the matter complained of within a specified period of time. By virtue of paragraph 27, if the licensee or lessee provides insufficient explanation or does not rectify the matter complained of within a stipulated period, the Minister may revoke the license or lease. 
 
A notice sent to the last known address of the licensee or lessee or his legal representative in Nigeria and published in the federal gazette shall be sufficient notice to the licensee or lessee of the revocation of the license or lease (paragraph 28). Additionally, by virtue of paragraph 29, the revocation shall be without prejudice to any liabilities which the licensee or lessee may have incurred or any claim against them which may have accrued to the Nigerian government.
 
4. Now Petroleum Act (2004) Cap (P10) LFN.
______________
 
KOLO avers that the revocation procedure, as enunciated in the Petroleum Act, “encapsulates in a nutshell the principle of ‘due process’ and the concept of ‘natural justice’ as enshrined in the 1999 Nigerian Constitution.”5 Section 44(1) of the Constitution states that no moveable property or interest in an immovable property shall be compulsorily acquired except in the manner prescribed by law. Also, Section 36 of the Constitution provides for the right to fair hearing in determination of a person’s civil rights and obligations in any matter for or against government or authority and such a person is entitled to fair hearing within a reasonable time by the courts (or any other tribunal).
Oil prospecting or oil mining licenses can be classified as ‘property’ by virtue of Section 44(1) of the Constitution. Thus, licenses confer on the licensees or lessees, economic and commercial value or rights. The Minister of Petroleum cannot unilaterally revoke or change the terms of such licenses as was emphasized in NNPC & Attorney General of the Federation v. FAMFA Oil Ltd., [2012] 17 NWLR 148. Any breach or unilateral revocation of an oil prospecting or oil mining license can be argued to be a breach of contract and against the tenor of Section 44 of the Constitution.
Discretionary powers of public officers can be controlled by various mechanisms. Some of these mechanisms include subjecting such decisions to public enquiry or scrutiny through publication of guidelines and approval of such guidelines by an independent body, amongst others.6
The decisions of the public officers are subjected to administrative fairness to ensure that they adhere to the rule of law and that the appropriate procedures are followed. These decisions are as well subject to judicial review by virtue of Section 46(1) of the 1999 Constitution, which states that “any person who alleges that any of the provisions of this Chapter has been, is being or is likely to be contravened in any State in relation to him may apply to a High Court in that State for redress.” In Abdulkarim v. Incar Nigeria Ltd7 the court held that judicial review gave the opportunity to courts in Nigeria to review administrative decisions with regards to their constitutionality, legality, rationality and regularity. In judicial review cases, the courts may grant remedies. These remedies may include an order of mandamus, order of injunction, declaration of rights, and the award of damages, amongst others, against the public officers.
 
5. A. Kolo, Legal Issues Arising from the Termination of Oil Prospecting Licenses by the Nigerian Government, 19 J. ENERGY NAT. RESOURCES & ENVI L. 164,172 (2007).
 
6. Evaristus Oshionebo, Regulating Transnational Corporations in Domestic and International Regimes: An African Case Study 53 (Univ. Of Toronto Press 2009).

____________

Section 9 of the Petroleum Act grants the Minister the power to make subsidiary regulations and some regulations have been made pursuant to the provisions of the Act. Some of the subsidiary regulations include the Mineral Oils (Safety) Regulations, Petroleum (Drilling and Production) Regulations 1969, Petroleum Refinery Regulations 1974, Crude Oil (Transportation and Shipment) Regulations, Deep Water Block Allocations to Companies (Back in Rights), Regulations and Oil Prospecting Licenses (Conversion to Oil Mining Leases) etc. The regulations constitute a significant part of the legal framework in the oil and gas industry.
The first regulation in focus will be the Mineral Oil (Safety) Regulations created by the Petroleum Minister as provided in Section 9 of the Petroleum Act. This Regulation defines ‘good oil field practice’, the standard required of oil companies operating in Nigeria by the Petroleum Act. While this phrase ‘good oil field practice’ is not defined in the Petroleum Act, Section 7 of the Nigerian Minerals Oil (Safety) Regulations provides insight regarding its meaning thus: Where no specific provision is made by these Regulations in respect thereof, all drilling, production and other operations necessary for production and subsequent handling of the crude oil and natural gas shall conform with good oil field practice, which for the purpose of these regulations shall be considered to be adequately covered by the appropriate current Institute of Petroleum Safety Codes, the American Petroleum Institute’s Codes or the American Society of Mechanical Engineers Codes.
Despite the plethora of regulations of the oil and gas industries in Nigeria, their enforcement has been far from desirable. One plausible explanation for the lax regulatory regime in the oil and gas sector is the relationship between the government as both a regulator and player in the oil and gas industry in Nigeria. The NNPC is a major player in the oil industry and involved in joint venture agreements with oil MNCs (Multi-National Corporations). In joint venture agreements in the oil industry, NNPC is always the majority shareholder. A government as a partner in a business that it regulates is not an uncommon phenomenon. However, unless “robust, independent regulatory and oversight mechanisms are in place, conflicts of interest can result in violations of human rights.”8 The latter scenario exemplifies the oil and gas industry in Nigeria. The Department of Petroleum Resources (DPR) is an agency of the government that regulates and enforces policies and regulations in the oil and gas industry. Considering the economic interest of the Nigerian state through its agency (NNPC) in the oil industry, it will be very unlikely for the DPR to effectively implement or enforce the oil and gas related regulations. The DPR is not an independent body and it appears to be an extension of the state.9
7. [1992] 7 NWLR (pt 251) 1.
8. Amnesty Int’l, Nigeria: Petroleum, Pollution and Poverty in the Niger Delta, 42 (2009).
9. Ekhator Eghosa supra.

______________________
The next set of regulations in focus will be the Petroleum (Drilling and Production) Regulations 1969 and the Petroleum Refining Regulations 1974. These subsidiary regulations were made by the Minister by virtue of the powers conferred on him by Section 9 of the Petroleum Act. Regulation 25 of the Petroleum (Drilling and Production) Regulations 1969 (PDPR) enjoins oil licensees or lessees (these are mainly oil multinationals in Nigeria) to: adopt all practicable precautions including the provision of up to date equipment approved by the Director of Petroleum Resources, to prevent the pollution of inland waters, rivers, water courses, the territorial waters of Nigeria or the high seas by oil, mud or other fluids or substances which might contaminate the water, banks or shoreline or which might cause harm or destruction to fresh water or marine life and where any such pollution occurs or has occurred, shall take prompt steps to control and if possible, end it.10
The Petroleum Refining Regulations (PRR) 1974, paragraph 43 (3) provides thus: The Manager [of a Refinery] shall adopt all practicable precautions including the provision of up to-date equipment as may be specified by the Director [of Petroleum Resources] from time to time, to prevent the pollution of the environment by petroleum or petroleum products; and where such pollution occurs the manager shall take prompt steps to control and, if possible, end it.
THE ENVIRONMENTAL IMPACT ASSESSMENT ACT (EIAA) OF 1992:
This is another mechanism that enhances good environmental practices in Nigeria. This Act serves as a guide on the procedures to be undertaken in considering the likely impacts of any project whether private or public on the environment. Also, the various states in Nigeria have their distinct environment sanitation laws regulating aspects of environment practices or sanitation in the states. The Environmental Impact Assessment Act is one of the few statutes in Nigeria that encourages public participation in the oil and gas industry in Nigeria.
The EIAA is said to be a landmark in the Nigerian environmental protection regime because it is the first statute that allows public participation in the decision making processes relevant to development.11 Thus, members of the public have access to information on such projects and participate in the decision-making process on the potential (negative or positive) impacts on their immediate environment.
Under section 2 (1) (4) of the EIAA, oil MNCs (and other relevant project developers) shall not embark on projects without considering the environmental impacts at the early stages, except as permitted by law. 
By virtue of Sections 2(2)-(3) of the EIAA, “where the extent, nature or location of a proposed is likely to significantly affect the environment,” oil MNCs are expected to undertake an environmental impact assessment of the intended project.
Under Sections 4(d) – (e) of the EIAA, an environmental impact assessment shall include a description of the proposed activities, assessment of the proposed activities, an assessment of the likely environmental impacts and alternatives to mitigate any negative impacts of the project, amongst others. Environmental impact assessment must be undertaken on the activities or industries listed as mandatory study activities in the schedule to the EIAA. The industries deemed as mandatory study activities under the EIAA include mining, petroleum, transmission activities and power generation.
 
Section 7 of the EIAA allows public participation in environmental impact assessment in Nigeria. It provides: Before the Agency gives a decision on an activity to which an environmental assessment has been produced; the Agency shall give opportunity to government agencies, members of the public, experts in any relevant discipline and interested groups to make comment on environmental impact assessment of the activity.
An inherent weakness in the EAIA is that, in some instances, environmental impact assessments can be jettisoned. The Act creates some exceptions. These exceptions are found in Section 15(1) which states thus:
An environmental assessment of project shall not be required where –
(a) In the opinion of the Agency the project is in the list of projects which the President, Commander-in-Chief of the Armed Forces or the Council is of the opinion that the environmental effects of the project is likely to be minimal;
(b) The project is to be carried out during national emergency for which temporary measures have been taken by the Government;
(c) The project is to be carried out in response to circumstances that, in the opinion of the Agency, the project is in the interest of public health or safety.
The above provisions negate the tenor of the EIAA. For example, notwithstanding valid objections to a proposed project, the President of Nigeria is within his powers to evade the statutory requirements for an EIA in oil and gas projects. Thus, oil MNCs with access or ‘connections’ to the President could potentially influence him to give approval to their proposed projects notwithstanding the negative environmental impacts of such projects.
10. Petroleum (Drilling and Production) Regulations 1969, Legal Notice 69 of 1969, Regulation 25.
 
11. Yinka Omorogbe: The Legal Framework for Public Participation in Decision Making on Mining and Energy Developmen in Nigeria (2002).

______________

LAWS ON GAS FLARING IN NIGERIA
Environmental degradation occasioned by the activities of oil multinational firms poses tremendous challenges to the livelihoods of the inhabitants of the Niger Delta. Pursuant to that, it has been documented that the economic degradation inherent in the Niger Delta has exacerbated the levels of poverty in that part of Nigeria.12 
Gas flaring occurs when oil is pumped out of the ground, and the gas produced is separated and, in Nigeria, most of it is burnt as waste in massive flares.” Thus, in the process of refining, the natural gas, otherwise known as ‘associated gas,’ is removed from the crude oil being refined. Presently, Nigeria flares are the second largest amount of natural gas in the world behind Russia; about 2.5 billion cubic feet of associated gas is wasted in Nigeria every day.13
The law regulating the incidence of gas flaring in Nigeria is the Associated
Gas Re-Injection Act (hereinafter AGRA) which was enacted in September 1979. The purpose of this law was to compel oil and gas companies operating in Nigeria to submit their programmes for gas re-injection and schedule for the implementation of gas re-injection.
Section 1 of the Act states that every firm producing oil and gas in Nigeria must submit to the Minister of Petroleum a preliminary programme encompassing – “(a) schemes for the viable utilization of all associated gas produced from a field or groups of fields; (b) project or projects to re-inject all gas produced in association with oil but not utilized in an industrial project.” 
 
Under Sections 3 and 4 of the AGRA, gas flaring is prohibited except with the consent of the Minister. Also, under Section 3, any oil and gas company engaging in gas flaring without a certificate by the Minister is engaging in unlawful activities and such a firm “shall forfeit the concession granted in the particular field.”
 
 
Section 1 of the AGRA Regulation regulates the issuance of certificates authorising the continuation of gas flaring in particular fields when the following conditions are met:
Where more than seventy-five per cent of the produced gas is effectively utilised or conserved;
(b) Where the produced gas contains more than fifteen per cent impurities, such as N2 (nitrogen gas), H2S (hydrogen sulfide), C02 (carbon dioxide), etc. which render the gas unsuitable for industrial purposes;
(c) Where an on-going utilisation program is interrupted by equipment failure:
Provided that such failures are not considered too frequent by the Minister and that the period of any one interruption is not more than three months;
(d) Where the ratio of the volume of gas produced per day to the distance of the field from the nearest gas line or possible utilisation point is less than 50,000 SCF (standard cubic foot)/KM:
Provided that the Gas to Oil ratio of the field is less than 3,500 SCF/bbl, and that it is not technically advisable to re-inject the gas in that field;
(e) Where the Minister, in appropriate cases as he may deem fit, orders the production of oil from a field that does not satisfy any of the conditions specified in these Regulations.
Thus, it is arguable that gas flaring is allowed under Nigerian law because the Petroleum Minister can legally permit the continuation of gas flaring by oil multinationals if any of the aforementioned conditions are met by oil companies. The regulations have emphasized economic benefits rather than ending the scourge of gas flaring in Nigeria.14
The Nigerian judiciary and the activism of civil society (including NGOs) in Nigeria have been the bulwark of opposition to the continued flaring of gas in Nigeria. For example, in the case of Gbemre v. Shell, No. FHC/B/CS/153/05 (Nov. 14, 2005), the plaintiff filed a suit against Shell, the Attorney General and the Nigerian National Petroleum Corporation (NNPC) to end the practice of gas flaring. The court held that the extant gas flaring law “was inconsistent with the Applicant’s right to life and/or dignity of human person” as enshrined in the Nigerian Constitution and the African Charter.
There are other laws that are relevant in environmental discourse in Nigeria: The harmful Waste (Special Criminal Provisions) Act 2004 prohibits the dumping (without the requisite authority) of harmful waste on any land, air and waters of Nigeria. The Hydrocarbon Oil Refineries Act 2004 regulates the licensing and control of activities relating to the refining of hydrocarbon oil in Nigeria. The Oil in Navigable Waters Act 2004 under Section 1 prohibits the discharge of oil from a Nigerian ship into its territorial waters. 

It is however sad that despite the enactment of these laws, the incidence of gas flaring continues to be perpetrated by the oil MNCs without strict sanctions from the Federal Government.  It perhaps so because the NNPC an agency of the Federal Government is operating in joint venture with the MNCs, thus any of such sanctions would jeopardize the economic and business interests of the corporations.

12.  UNDP, Niger Delta Human Development Report, 2006.

 

13. Country Analysis Brief Overview: Full Report (Nigeria), US Energy Information Administration (Dec 2013). http://www.eia.gov/countries/analysisbriefs/Nigeria/nigeria.pdf

14. Ekhator Eghosa supra 
_______________

NEW DEVELOPMENTS IN THE OIL AND GAS INDUSTRY IN NIGERIA 
The Nigerian government enacted the Nigerian Oil and Gas Industry Content Development Act 2010, which is otherwise known as the Local Content Act. It was signed into law in April, 2010. This Act provides that MNCs in the oil and gas sector in Nigeria should place ten percent of their annual profit in Nigerian Banks and contract their legal and insurance services to Nigerian firms. Also, the Act states that Nigerian companies must be the major actors in the issuance of oil fields, licences and in any subsisting contract in the Nigerian oil and gas sector. The Act establishes the Nigerian Content Development Agency which has the responsibility of putting in place a framework for continuous growth of Nigerian Content in the Nigerian economy through a balanced programme of planning, target setting, monitoring, stimulating employment, improving contractor capability amongst others.
Furthermore, there is another law regulating MNCs, this is the Petroleum Industry Bill (PIB), which is yet to be passed into law. The PIB encompasses provisions dealing with the legal and regulatory framework for the oil and gas sector and to establish rules for the operation of MNCs in the sector. The intent of the PIB is to consolidate all the Nigerian laws and statutes into one legislative document. The PIB is expected to increase transparency, accountability and good corporate governance in the oil and gas sector by removing confidentiality clauses through competitive bid processes for oil prospecting licenses.
CONCLUSION
From the analysis of the state regulation of the Nigerian oil and gas industry, it is obvious that the public regulatory regime in the oil and gas sector in Nigeria is ineffectual. A major impediment in the regulatory regime in Nigeria is the lack of political will by the regulatory agencies to enforce the laws and regulations in the oil and gas sector. A notable example is that no regulatory agency in Nigeria has instituted civil or criminal actions against the oil MNCs for breaching the provisions of the laws in the oil and gas industry. This has made the oil MNCs to be more brazen in their activities and this is exemplified by their non-adherence to the laws.15
The country relies heavily on the oil and gas sector which accounts for more than 70% of its revenue, thus it is argued that should the MNCs and investors feel threatened by government’s penalties for violations of the regulatory laws, they would pack up and leave the country resulting in loss of revenue. However, the adherence to the rule of law is a sacrosanct principle that in any clime must be applied to everyone alike including corporations, this to avoid abuse of law and order and jeopardizing the rights of the citizens whose interests should be protected by the government. 
 
The delay in enacting the PIB is a clog in the wheels of progress to the nation. The Bill has been subject of political interests which has been an indicator that should it come into effect, the Industry would be overhauled and the corrupt practices which hitherto has been prevalent would be plugged. Hence the lawmakers and the stakeholders in the industry must ensure the Bill comes into operation.   

15. Ibid
____________

About the author 

EZEOHA MARKANTHONY 
CHUKWUDI Is a 500 level Law student of Nnamdi Azikiwe University (UNIZIK) Awka, Anambra state. And the president, Law students’ Association.   



Copyright Reserved 
                              © 2018      

For knowledge and Justice

 2,186 total views,  2 views today

4 thoughts on “The Regulatory Framework for the oil and gas Industry in Nigeria

Leave a Reply

Your email address will not be published. Required fields are marked *

error

Enjoy this blog? Please spread the word :)

Open chat