Energy Capital & Power congratulates Nigeria’s petroleum sector on the official passing of the long-awaited Petroleum Industry Bill (PIB) by the senate on Thursday, 1 July 2021. After careful consideration of the final draft – presented to the National Assembly in September 2020 – and input from both the executive and legislative arms of government, the PIB has been passed into law, enacting a complete legislative restructuring of the Nigerian oil and gas sector.
The PIB comprises a combination of 16 petroleum laws, consolidated into a single document, which outlines the legal and regulatory framework, institutions and regulatory authorities for the Nigerian petroleum industry. Through the provision of guidelines for the operation of the upstream and downstream sectors, as well as the streamlining and reduction of some oil and gas royalties, the PIB seeks to establish a transparent and enabling environment for international investment.
The PIB was initially presented to the National Assembly in 2008, after which it underwent regular amendments and modifications. In its determination to see the eventual passing of the Bill, Nigeria’s Ninth Assembly deployed a strategy through which the constant interaction and collaboration between the executive and legislative arms of the government was implemented. Clearly, this strategy was successful, and the recent passing of the PIB will now enable the Nigerian oil and gas sector, as well as regional and international stakeholders, to benefit from a newly competitive and transparent sector.
With approximately 36.97 billion barrels of proven crude oil reserves in 2020, and over 187 trillion cubic feet of proven natural gas reserves, Nigeria is a major energy player on the global stage. The passing of the PIB seeks to fully exploit these hydrocarbons reserves by establishing an attractive regulatory framework that will drive exploration and production, accelerating socioeconomic growth in the process. Energy Capital & Power applauds this historic move and supports Nigeria’s petroleum sector participants as they move ahead into a new era of energy investment.
What’s more, with a strong natural gas component that prioritizes gas monetization and production, and backed by a supportive framework for gas tariffs and delivery, the PIB prioritizes gas-specific investments with the aim of creating an independent industry. The passing of the Bill will, therefore, significantly increase international investor interest in Nigerian gas, spurring exploration and production country wide.
Additionally, the PIB prioritizes community interests through strong social and environmental components. By ensuring that all oil and gas stakeholders prioritize local content and environmental safeguarding, Nigeria is expected to lead the way in African environmental, social, and governance principles and implementation.
As the country begins to capitalize on the various opportunities created by the passing of the PIB, and we see the true benefits of a complete regulatory overhaul, Nigeria can serve as a model for other African countries seeking rapid sectoral growth. The passing of the Bill comes at a time where COVID-19 impacts, and globally reduced demand, have left a lasting imprint on African oil and gas markets. By providing an industry supportive and investor attractive framework to expand exploration and production, Nigeria is poised to see a rapid increase in international stakeholder participation and associated industry growth.