Nigeria is actively reshaping its oil and gas industry. This effort now draws sharply contrasting reactions. Industry analysts commend the sweeping reforms. Yet, lawmakers accuse key regulators of failing to enforce critical safety and environmental rules.

Industry Hails NUPRC’s Implementation of PIA

A new sector review was released on Monday by BusinessMetrics. It applauds the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). The report praises NUPRC’s approach to implementing the Petroleum Industry Act (PIA). Reforms in the past year have started rebuilding investor confidence. They also modernize oversight and improve transparency in the upstream sector.

The review highlights rapid digitization of monitoring systems. It also notes improved regulatory timelines. Clearer fiscal frameworks are now in place. These changes are reshaping how global capital markets view Nigeria.

According to the report, NUPRC has shifted to digital supervision. This covers production, metering accuracy, fiscal obligations, and environmental performance. This change has removed long-standing doubts about data reliability.

“These digital tools have reduced reporting delays,” the organization stated. “They have also improved data integrity. Nigeria’s upstream statistics now have enhanced global credibility.”

The report added that reliable, real-time data is crucial. It signals a trustworthy investment climate. NUPRC’s digital reforms are boosting confidence among operators. International financiers also rely on transparent information. They need it before investing in new field developments.

The review claims that licensing and approval procedures are now clearer. They follow rules-based processes. Regulators and operators engage in structured discussions.

“Clearer timelines for approvals exist,” it said. “There are structured consultations with operators. Regulatory decisions align with PIA provisions. This has created a more efficient operating environment.”

It adds that this enables quicker project movement. Administrative bottlenecks are reduced. Investors gain greater clarity on regulatory expectations.

The fiscal clarity in the PIA has encouraged renewed activity. Marginal fields are seeing new life. Dormant licenses have been revived. Both indigenous and international players are making fresh commitments.

“The fiscal certainty from the PIA continues to incentivize capital deployment,” the review stated. “We see a gradual resurgence in upstream investment appetite. This is driven by the clarity and predictability investors have long sought.”

Regarding gas markets, the report commends NUPRC. It praises the enforcement of domestic gas delivery obligations. Frameworks for flare-gas commercialization are also lauded. These are key pillars of Nigeria’s energy transition strategy.

“The Commission’s work in gas monetization is particularly impactful,” the statement added. “It supports industrial expansion. It contributes to power stability. It also positions gas as a central pillar of Nigeria’s economic transformation.”

It also highlights customer-focused reforms. Improvements to the One-Stop Regulatory Centre are cited. This tool is vital for cutting red tape. It signals a willingness to ease operational barriers.

“With sustained PIA implementation, Nigeria is better positioned,” the organization noted. “It can compete for global capital. It can increase production capacity. It can advance long-term energy security.” It urged continued discipline and innovation to unlock the sector’s full potential.

Lawmakers Warn of Risks from Aging Assets and Enforcement Lapses

Despite the positive appraisal, pressure is growing in parliament. Lawmakers describe slow and inadequate enforcement of critical PIA provisions. This is especially true for decommissioning and abandonment of aging assets.

On Monday, the House of Representatives Ad-hoc Committee on Decommissioning and Abandonment accused regulators. They claimed Nigeria’s upstream and midstream regulators breached statutory duties. These duties are outlined in the PIA. The committee alleges failures to comply with legal requirements. This exposes host communities and public finances to serious environmental risk.

The investigation focuses on mandatory financial reserves. It checks if operators are creating escrow accounts. These accounts should cover dismantling obsolete installations. This cost arises at the end of their operational life. The probe follows warnings about a funding gap. This gap is estimated at about $20 billion and is growing.

Officials from both regulators confirmed delays during the hearing. They cited “legal technicalities” within the Ministry of Justice. Issues involving the Central Bank of Nigeria also affect escrow account management.

A regulator’s representative presented to lawmakers. He insisted that enforcement has occurred. This is under Sections 232 and 233 of the PIA. These sections require operators to include decommissioning plans. Such plans must be part of their field development applications.

“Our response was clear,” he said. “NUPRC has strongly enforced Sections 232 and 233 of the petroleum acts by the PIA 2021. Every field development plan submitted to the NUPRC now must include a [D&A] plan.”

He noted that these plans ensure environmental restoration. The aim is to return areas “close to their original state.” This happens once assets complete their life cycle.

However, Bassey Ekpenyong chairs the committee. He criticized regulators. He noted their failure to fully operationalize regulations approved over 20 years ago.

“The regulation was approved in 2003,” Ekpenyong stated. “I believe you submitted it to the Minister of Justice quickly.” He questioned why legal processes remain unresolved since then.

The committee’s work continues amidst growing concerns. Neglected pipelines, wells, and facilities pose risks. Local communities and taxpayers could bear the cost. This includes environmental cleanup and safety hazards. This will happen if decommissioning rules are not enforced.