- The Commission admits overlap between regulatory agencies
OBIORA METU
Concerned by the many challenges confronting the nation’s energy sector landscape, partly as a result of actions and inactions of the federal government, some operators yesterday, called for an alignment in regulatory activities between the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
They argued that the misalignment between the two key agencies of the oil industry had created overlap that had caused them operational risks and discouragement to investment in the industry.
While highlighting the plethora of challenges facing the sector such as steady decline in investment, oil theft, subdued oil and gas production and other issues that discourage them to remain in the business, the operators called on the incoming administration to tackle those challenges to save the industry from further collapse.
The operators comprising the international oil companies (IOCs) and Nigerian independent oil and gas produced expressed this disappoint during CEO Roundtable on energy at the ongoing sixth Nigerian International Energy Summit (NIES) holding in Abuja.
However, the Chief Executive Officer of NUPRC, Mr. Gbenga Komolafe, who confirmed the overlap between the regulatory agencies, while speaking at another session at the summit, noted that his agency was effectively implementing the provisions of the Petroleum Industry (PIA) in order to enable businesses in the industry.
The CEO Roundtable, with the theme: “Building Energy for Tomorrow”, which was moderated by the Managing Director of Tenaris Nigeria, Mrs. Rosario Osobase, had panelists including Deputy Managing Director, Deepwater, TotalEnergies E&P Nigeria, Mr. Victor Bandele; Chairman of the Oil Producers Trade Section (OPTS) Chevron Nigeria Limited, Mr. Rick Kennedy; and Chairman of Shell Companies in Nigeria, Mr. Osagie Okunbor as members.
Others were the Managing Director, Nigeria Liquefied Natural Gas Limited (NLNG), Dr. Philip Mshelbila; Executive Director, ExxonMobil Nigeria, Mr. Oladotun Isiaka; Chief Operating Officer, Oando Energy Resources Limited, Dr. Alex Ainojie Irune, and Executive Chairman of AA Holdings, Mr. Austin Avuru.
The operators said the ugly state of the Nigerian oil and gas industry, characterised by rampant oil theft and other security challenges, debts owed some of them by the government, the steady decline in investment, subdued oil and gas production, and other discouraging elements give them sleepless nights.
In his remarks, Isiaka, who said the PIA had brought some fiscal clarity into the oil and gas business, categorically knocked the NUPRC and NMDPRA over the misalignment in their regulatory roles and policies.
But in terms of planning and working to guarantee energy future for Nigeria, he said what was needed as far as Nigeria was concerned was in doing things that would improve the country’s competitiveness.
Isiaka stated, “We need to ensure that over the next few years, we do not worsen the ease of doing business and the country will not have additional risk, which then results in exposures, which then means that projects that are otherwise profitable will become less-competitive within the global atmosphere.
“And I’ll use two examples to further buttress what I’m talking about here. It will be contentious but as of today, there exists significant misalignment between the two regulatory agents; misalignment that has created overlaps, overlaps that create gaps, gaps that create risks for us as operators, in certain instances, legal exposure.
“This particular example has the capability of making otherwise profitable opportunities less-attractive. Another example is the regulations that are being put in place, some of those that are being gazetted so far are adding risk to the portfolio risk that could make opportunities that are otherwise profitable to become less-competitive.
“So that will be the way I’ll address this. We have a lot of opportunities and for us to plan to move them forward is to continue to ensure that we continue to make sure the environment is easy for doing business.”
He maintained that one major problem facing the industry, which gives him sleepiness was how to continue to attract funds to companies considering the waning investments in oil sector.
According to him, there have been steady decline in investments over the past 10 to 20 years, and the decline was alarming.
In his thoughts, Kennedy, who also expressed concerns about the problems bedeviling Nigerian oil and gas, said the industry was experiencing turbulent times.
“There are many things that keep me awake at night. these are uncertain and turbulent times. So what I tend to focus on in terms of leadership is really our people or workforce. As long as we got a safe, efficient, reliable, clean operation was cost effective.
“It’s our leadership and it’s our people. And we are focused very much so on building the business acumen of the entire workforce. I want everybody to know how our business works and their role within that. And then no matter what happens, we can adapt as needed, to address any issue very quickly,” he stated.
For Bandele, safety in operations, loss of required competent manpower and quality equipment were major challenges currently facing the Nigerian oil industry sector, blaming the ugly scenario on waning investments.
He opined, “We have started to have a trend which is a combination of the two of innovation, in that way, you have declining activity in the industry.
“What happens is the contractors that we use, the people that we call upon to work most times, they’re not the best in class, because these workers are going to be present in areas where there is continuous investment.
“So, we are now faced with getting the wrong contractors, the majority of them are using Nigeria as second office. They will have a big office elsewhere and will have a tiny office in Nigeria. So, it’s a trend that is alarming.
“We are wondering what’s the quality of equipment that has been sent to the site. So, safety of operations can be a big issue. If we do not have continuous and stable high level investment in the country, the future is uncertain.”
In his intervention, Irune, said the Nigerian oil and gas industry had reached an inflection point, adding that everything revolved around portfolio rationalisation.
He said, “Nigeria, if you do not get your act together, you will run so low, there will be no more monitoring and paraphrasing. If you do not pay your debts, you will not be advanced more capital for projects. Simple.
“I think the point every person was trying to make was, how do we understand that this inflection point has come, to support indigenous players to be able to shift naturally into these roles? Some of us are there already.
“I wrote down a few things: security, policy, funding, infrastructure. And in that order, I think the panel have taken those points, so, security is a big issue, and if as independents, we can’t get over that issue and deliver on all our commitments to our funders, in essence, there will be no future for the independents.
“And I think for us, that’s the underlying issue there. How do we continue to sustain the investment that goes into the acceleration of crude oil extraction that must happen before the world completely dries up?”
Also sharing his thoughts, Okunbor said the government was owing Shell and some other IOCs some huge debts that were yet to be paid, adding that a lot needed to be done to bring back Investment into the oil sector.
He said Nigeria’s race to achieving energy security and transition would require more investments into major oil and gas development projects to realise, adding that while the PIA presents opportunities for the sector, there were still some grey areas that need to be addressed.
Meanwhile, in a fire chat session at the event, Komolafe confirmed the position of the operators, saying there have been issues of regulatory overlaps between NUPRC and NMDPRA and that that has been a matter of concern for the industry.
He, however, noted that his agency was effectively implementing the provisions of the Petroleum Industry (PIA) in order to enable businesses in the industry.
He said, “Yes, we recognise the fact that there have been issues of regulatory overlap between the two regulators and that have been a matter of concern for the industry. Of course, it is a new law and as pioneers, we will continue to implement the law and continue to take notes of the challenges in the course of the Implementation.
“As a matter of fact, we will expect that the incoming government will be asking us to make special reports that we will present to it.
“So, we are actually compiling that and we intend to make that as part of our inputs and observation as pioneers in the course of the presentation of the report.”
He stated that the agency had already gazetted five post-PIA regulations for the upstream sector, announcing that another 13 regulations would be gazetted in the coming weeks.
Komolafe added, “The commission was doing everything possible to effectively implement the PIA. The industry clearly needs clarity and certainty in their operations. You need the regulations to achieve this.
“In all, as I speak, the commission has succeeded in gazetting five regulations and again, all things being equal, in the weeks ahead, we intend to see the gazetting of additional 13 regulations just within the space of 16 months”
