- Aims at providing a regulatory environment that assures efficiency, predictability, clarity and effectiveness
Seven new regulations aimed at providing a regulatory environment that assures efficiency, predictability, clarity and effectiveness to the Nigerian oil and gas industry have been issued by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
These bring to 12 the number of regulations so far concluded and issued by the Commission in line with its mandate as prescribed by the Petroleum Industry Act (PIA), 2021.
The new regulations were signed and issued on Thursday at the Commission’s headquarters by the Commission Chief Executive, Engr. Gbenga Komolafe, in a ceremony that was also witnessed by the Executive Secretary of the Nigerian Extractive Industry Transparency Initiative (NEITI), Dr Orji Ogonnaya Orji.
All the 12 regulations and others to be finalized soon would serve as the key regulatory tools to be deployed by the Commission in the discharge of its statutory functions under the PIA regime. Eighteen (18) regulations were initially identified as priority. Issuing the regulations represent a significant milestone achievement for the Commission in its continued stride towards the attainment of the goals of the PIA and the reformation of the upstream petroleum sector.
The seven new regulations are:
- The Nigeria Upstream Petroleum Measurement Regulations, 2023;
- Production Curtailment and Domestic Crude Oil Supply Obligation Regulations, 2023;
- Frontier Basins Exploration Fund Administration Regulations, 2023;
- Nigeria Upstream Decommissioning and Abandonment Regulations 2023;
- Significant Crude Oil and Gas Discovery Regulations, 2023;
- Gas Flaring, Venting and Methane Emission (Prevention of Waste and Pollution) Regulations, 2023; and the
- Nigeria Upstream Petroleum Unitization Regulations, 2023.
Earlier, five regulations were successfully gazetted into law between June and October 2022. They are:
- Petroleum Licensing Round Regulations 2022;
- Petroleum Royalty Regulations 2022;
- Domestic Gas Delivery Obligations Regulations 2022;
- Conversion and Renewal (Licences and Lease); and the
- Nigeria Upstream Petroleum Host Communities Development Regulations 2022.
All the regulations are revolutionary in nature and aimed at providing a regulatory environment that assures efficiency, predictability, clarity, and effectiveness to the industry in the discharge of the Commission’s mandate.
The PIA 2021 empowers the Commission to make regulations which will give meaning and intent to the spirit of the Act. Consequently, the Commission, in fulfillment of this mandate, swung into action with drafting of regulations of which five (5) were initially gazette and published.
Gazetting the 12 regulations demonstrates the Commission’s commitment towards providing a business enabling environment in the Nigerian upstream oil and gas industry space. Our drive to promote clarity, trust and predictability in the industry has remained un-flinching as evident in the efforts deployed towards ensuring that regulations and key policies necessitated by the PIA are developed and gazetted expeditiously to enable alignment with the provisions of the PIA.
The seven (7) regulations signed today are part of the 13 draft regulations that were presented for discussion during the first, second and third phases of our consultations with stakeholders between 2022 and 2023.
It is worthy of note that inputs of Stakeholders from the various engagements were considered in the drafting of the regulations. The drafts were subsequently forwarded to the Attorney General of the Federation and Minister of Justice for vetting, legislative standardization, and approval.
The seven new regulations are to perform the following functions:
- Nigeria Upstream Petroleum Measurement Regulations, 2023. This will close the metering gap in upstream petroleum operations; encourage accelerated hydrocarbon measurement metering devices roll-out in upstream petroleum operations; encourage the development of independent and competitive meters used in the Upstream; attract private investment in the provision of metering services; provide for the regulation of the measurement of petroleum produced; ensure transparent and accurate measurement of crude oil and gas as a basis for the calculation of oil and gas revenues accruable to the Government; and define requirements for the design, fabrication, manufacturing, testing, calibration, operation and maintenance of upstream metering equipment. This is a clear departure from the trajectory in the Nigeria upstream sector since oil was discovered in Nigeria in 1956 and production commenced in 1958.
- Production Curtailment and Domestic Crude Oil Supply Obligation Regulations, 2023. This will provide general rules for production curtailment and utilization of the produced petroleum in relation to export and domestic crude oil supply obligations, pursuant to sections 8(c) and 109 of the Act.
- Frontier Basins Exploration Fund Administration Regulations, 2023. This will also provide the general rules for the exercise of the Commission’s responsibilities with respect to frontier basins in Nigeria, pursuant to section 9 of the Act and the administration of the Frontier Exploration Fund. The aim is to encourage and attract investment to the frontier basins in Nigeria.
- Nigeria Upstream Decommissioning and Abandonment Regulations 2023. It seeks to ensure that decommissioning and abandonment activities are conducted in accordance with good international petroleum industry practice. The regulations also set the framework for the establishment and administration of a Decommissioning and Abandonment Fund.
- Significant Crude Oil and Gas Discovery Regulations, 2023. This would ensure optimum exploitation of petroleum covered by Petroleum Prospecting Licenses, granted under the Act, by the retention of areas of significant crude oil discovery and significant gas discovery by a licensee for specified time in accordance with section 78 of the Act.
- Gas Flaring, Venting and Methane Emission (Prevention of Waste and Pollution) Regulations, 2023 seeks to:
- reduce environmental and social impact associated with gas flaring and venting of natural gas and fugitive methane emissions into the atmosphere;
- preserve and protect the environment;
- prevent waste of natural resources;
- enhance energy transition in Nigeria;
- create social and economic benefits from gas flaring and venting; and
- set out the procedure for the Commission to exercise its rights to take gas at flare point in accordance with the Act and all other applicable laws.
- Nigeria Upstream Petroleum Unitization Regulations, 2023 establishes rules, principles, and procedures for the implementation of unitization of oil and gas from a petroleum reservoir that extends beyond the boundaries of a licence or lease area into an area to which another licence or lease relates.
It is pertinent to note that the process of formulating the above regulations has been a rigorous and strenuous exercise characterised by several challenges at different stages of the regulation making process. Nevertheless, the outcome of that process is a result of critical thinking, vigorous engagements with the industry stakeholders, careful evaluation, and hard work by the Commission’s Regulation development team, whose efforts are a testament to the Commission’s continuing strive towards excellence in the discharge of its functions.
I also charge them to re-double their on-going efforts to speedily conclude work on the other regulations that they are currently working on as well as the others that have been identified and are being developed.
The Commission assures the industry of its continuous dedication to develop and issue policies that will create an enabling environment for growth and more investments in the Nigerian upstream oil and gas sector.
Engr. Gbenga Komolafe, FNSE
Commission Chief Executive
Thursday, May 25, 2023.