International oil companies’ bosses and their joint venture partner, the NNPC, on Wednesday backed a key reform policy contained in the Petroleum Industry Governance Bill (PIGB) that seeks to create a single regulator for the petroleum industry.
The PIGB, which is yet to become law, prescribed the establishment of the Nigerian Petroleum Regulation Commission (NPRC) to take over the jobs of the Department of Petroleum Resources (DPR) and the Petroleum Product Pricing Regulatory Agency (PPPRA). It will regulate operations in the upstream, midstream and downstream sectors of the industry.
Speaking at the 2019 Nigeria oil and Gas Conference in Abuja during a penal session that included the Chief Operating Officer Upstream of the Nigerian National Petroleum Corporation (NNPC), Rabiu Bello; Chevron Nigeria CEO, Jeff Ewing; Executive Director, Oil and Gas Commercial, Total E & P Nigeria Plc, Patrick Olinma; ExxonMobil Nigeria CEO, Paul McGrath; Managing Director, Shell Nigeria Exploration & Production Company, Bayo Ojulari and NOAC CEO, Lorenzo Fiorillo, the industry leaders said a single regulator would align Nigeria to world’s best practices.
But their position was contested by the Executive Secretary of the Nigerian Content Development and Monitoring Board, Simbi Wabote who stated that creation of separate regulators for the industry in the past was government’s way of tackling challenges facing the sector.
Total’s Olinma pointed out that having a single regulator would help reduce the contracting circle for projects in the industry to an acceptable period which would impact positively on cost of projects.
According to him, “today one of the challenges we have is that of the contracting cycle. So clearly, this is directionally the way to go and I believe that perhaps if we did that, we could help shorten the contracting cycle when we go from FDP to FID, which today, on the average, is about 36 months, you compare that to Ghana, Angola they are all within single digits 9 or 6 months”.
Bello on his part, said a single a regulator would encourage investment and reduce the bottle neck associated with seeking approvals from different regulators before final investment decisions are taken.
“If you look at the industry, we have DPR that oversees the entire industry technically, all the technical regulations are done by the DPR, we have some environmental issues that are controlled by the Ministry of Environment.
“We have the downstream commercial issues regulated by PPPRA, we have PEF regulating the equalisation of petroleum product prices and of course we have NAPIMS more like a commercial regulator of the upstream as well, but, what we are trying to do is to have a regulator which will look at the entire streams both midstream, downstream and upstream but looking at each of each stream in both technical and commercial bases.
“So that when you have a project, instead going through all the different regulators, to come up with a solution or approval of that that will allow him to go ahead and take your FID, we will now have one regulator that will do that.
“The intention is to encourage the investment to be fast-tracked because, it is very important for us the commercial and technical aspect of the business to be seen together and decision will be taken”.
On his part, Chevron’s Jeff Ewing said “it is a world-wide best practice to have a single regulator because it makes things much easier. You can make things move faster and more cost-effectively. I think right now there is confusion, overlapping regulations, overlapping regulators and it creates both time and cost in a project to get to move forward”.
ExxonMobil’s McGrath and Shell’s Ojulari agreed with their positions but added that a single regulator will ensure that there is an institution that takes responsibility for the overall end to end history of a project.
But in his response, Wabote countered that the multiple agencies arose because “of things that have happened in the past in the various companies. If something goes wrong and government sees that we are not being told the truth, we are not being given the right figures, government in its wisdom will set up a body to regulated that aspect.
“So, when you push back to say there should be a single regulator, people need to ask themselves why were these bodies established in the first instance?
SOURCE: TheAuthority