Investors in Nigeria Petroleum Sector Need Clarity of Regulation- Simon-Hart

At a panel session on oil industry regulation at the Nigeria International Energy Summit (NIES), Patricia Simon-Hart, a Board member of Aradel Holdings Plc, stated that Petroleum Industry Act (PIA) has been a landmark moment for the oil and gas industry with ambitious law in place for the country.

But the law alone will not achieve its desired purpose without proper implementation.

Simon-Hart added that part of what the industry needs is sector reforms to focus on implementation and strengthening institutions that will deliver what stakeholders expect in the industry. The spirit behind the PIA was to unlock the value within the petroleum sector.

She urged other African countries to look at areas that have worked. One of the main areas the PIA tried to adjust is the roles of separation within the sector. It is now clear that the ministry handles policy which is separate from regulatory functions. Regulators implement policies through rules, guidelines, regulations and enforcement that can be seen in the industry. The national oil company commercialises operation.

This sectoral clear division of roles within the industry has evolved although the institutions still needed to be strengthened.

The Aradel Board member was of the view that at present there are three regulators; Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and Nigerian Content Development and Monitoring Board (NCDMB), all regulators in the sector with relevant agencies.

There are also fiscal reforms that are beneficial to the sector to attract investment.  Executive orders have been given to unlock potentials within the sector and to attract investment.

The feedback has been encouraging because some investors have picked interest in deep water with more investment interests, Simon-Hart added.

She explained further that what investors are looking for in Nigeria and Africa is clarity in terms of regulation. Implementation of policies is the responsibility of the regulator. For the regulator, there has to be clarity of policies.

“We want to see a regulator that really and truly is the custodian of how to manage the entire oil and gas reserves and trying to optimize what we can gain for the value that can be derived.”

Deriving value not just for the government in terms of generating revenue, but create value for investors and the country.

According to Simon-Hart, the focus and drive is not to generate revenue but rather to unlock the values within the sector which can be achieved through investors.

The country should focus its attention on long term rather than immediate gains it can get from the sector.

“For African countries that want to follow, they should align with separation of power or roles as well as fiscal regimes that have been set up unlocking value within the sector.”

There should be no overlapping or duplication of roles and responsibilities where operators will go to two regulators for same purpose. There should be clarity.

“We’re on the journey, but over time, we’ll be able to tell whether there is consistency from the regulators with long term value not just short term.”