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From Uche Usim, Abuja
The Nigerian Midstream and Downstream Regulatory Authority (NMDPRA) has deepened its stakeholder engagement to attracting multi-billion dollar foreign direct investments (FDIs) and growing the nation’s economy in line with the Petroleum Industry Act (PIA).
To this end, the Authority held a Legal Advisers’ Forum on Wednesday to provide clarity on grey areas of the PIA for a fuller stakeholder buy-in and to further stimulate investors’ appetite towards Nigeria as a viable investment haven.
Speaking at the event, the Authority Chief Executive Farouk Ahmed, who was represented by the Executive Director, Distribution Systems, Storage & Retailing Infrastructure, Ogbugo Ukoha, told the audience that the PIA was intentionally designed, among other key objectives, to create two distinct but complementary regulatory entities, promote gas utilisation through deepening of midstream operations, unbundle the composite licensing regimes to encourage more participation across the upstream, midstream and downstream value chain.
He also said the Act was meant to galvanise local and foreign investment and sustainably grow the industry for host communities and Nigerians in general.
“We are aware that stakeholders and potential investors require regulatory clarity to drive investment decisions and guide operations to ensure compliance with legal provisions and prevent reputational damage. “Regulatory clarity is also beneficial to the regulators as it will allow both entities to focus on their mandate as intended by the law for the benefits of the industry and Nigerians.
“The PIA was designed to restructure the industry by creating a demarcation between the upstream, midstream and downstream value chain for growth and efficiency. “To fully achieve this key objective, it also created two regulatory bodies from the erstwhile regulators with clear, distinct functions and mandates.
The NUPRC is mandated to fully regulate all Upstream operations as defined in Section 318 in the PIA, conduct measurement of crude oil and natural gas produced for the purpose of royalty determination and ensure an arm’s length transfer to midstream operations at measurement points while the NMDPRA on the other hand is saddled with regulating the Midstream and downstream operations whether or not related to a lease”, he explained.
The NMDPRA boss added that part of the change management in the Implementation of the PIA was that the entire industry, especially those dealing with the defunct regulators must understand that the two Agencies are not the same, complimentary or substitutes for each other as their functions are clear and distinct.
“The law made it clear in section 25 and 48 that regulations of upstream operations and midstream/downstream operations are exclusive to NUPRC and NMDPRA respectively. NMDPRA cannot perform the NUPRC functions and vice versa.
“Beyond the restructuring of the regulatory agencies, the law also required the restructuring of companies and operations in the oil and gas industry, while also addressing hitherto industry established norms such as what is upstream?
“What is midstream and downstream operations? It further elucidates on Licenses required for export, calculation of royalties’ definition of measurement point etc. All these provisions in the law were not done in isolation but with a clear target; the remodeling of the oil and gas value chain in Nigeria by creating distinct midstream business entities which had previously been subsumed in Upstream operations”, he elucidated further.
Also speaking, NMDPRA’s Legal Adviser, Dr Joseph Tolorunse said the forum presented a unique opportunity for deepening industry General Counsels and Legal Advisers’ understanding of the midstream and downstream petroleum sector regulatory framework and the business enabling and investment opportunities derivable from the Petroleum Industry Act 2021 (PIA).
“Some of the Authority’s objectives in creating this Forum are to enhance compliance; enable more intimate conversations with legal practitioners in the Nigerian oil and gas industry on their areas of concern; and enable industry legal practitioners to provide proper guidance to their respective managements on the dichotomy between upstream, and midstream and downstream petroleum operators.
“The purpose of this Forum is to discuss issues pertaining to; deepening industry legal practitioners’ understanding of the Authority’s powers, functions, and regulations; providing clarity on perceived regulatory overlaps between the Authority and Commission; promoting the business enabling and investment opportunities derivable from the licences, permits and authorisations issued by the Authority; and addressing legal concerns arising from the implementation of the PIA and the Authority’s regulations”, he explained.
