Category: News

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NNPC reforms under the Petroleum Industry Bill 2012: Plus ça change, plus c’est la même chose*

Feature article (warning – long post)

*the more things change, the more things remain the same

One of the primary objectives of Nigeria’s oil and gas industry reform has been to create a more efficient state-owned oil company (“SOC”). Government officials have often named the SOCs of Brazil – Petrobras, Norway – Statoil and Malaysia – Petronas, amongst others, as comparator companies on which the restructured national oil company would be modelled. The various drafts of the Petroleum Industry Bill (“PIB”) have proposed different reform alternatives culminating in the structural reform proposed in the Petroleum Industry Bill 2012 (the “Bill”). This article seeks to review the reform structure proposed under the Bill and to critically analyse the choices made.  As our title suggests, it is our view that although several changes have been made, the fundamental issues surrounding the inefficiency of the Nigerian National Petroleum Corporation (“NNPC”) remain untouched and will continue to plague the industry in the immediate future if these reforms are passed into law. Continue reading “NNPC reforms under the Petroleum Industry Bill 2012: Plus ça change, plus c’est la même chose*”

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Assobie on PIB, corruption & ministerial powers

Read the views of Prof. Assisi Assobie, former Chairman of the stakeholders working group of the Nigeria Extractive Industries Transparency Initiative (NEITI) on corruption and the Petroleum Industry Bill as reported in The Guardian newspaper here. The report is quite short but emphasises what has been commented on by others on the extensive powers granted to the Minister in the PIB.

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Petroleum Industry Bill Unlikely to Optimise Domestic Gas Supply

Continuing with our fiscal theme, here’s the link to KPMG’s recently published article titled Petroleum Industry Bill 2012: Highlights of the Fiscal Provisions.The article highlights critical provisions of the Petroleum Industry Bill and concludes by stating that its provisions are likely to lead to an increase in the effective tax rate of many companies. It also opines that the current provisions of the PIB are unlikely to optimise domestic gas supplies as the fiscal incentives for upstream gas development under the PIB are less attractive than available under the Petroleum Profits Tax regime. The article may be found here.

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Alison-Madueke – Petroleum Industry Bill will boost output by attracting foreign investment

Nigeria’s Petroleum Minister, Mrs Diezani Alison-Madueke is reported by Bloomberg commending the potential benefits of the PIB for investment in the Nigerian oil and gas industry. According to Alison-Madueke, the PIB is designed to create “a fair balance between small and big operators in the same terrain.” The Minister’s comments are likely to refer to the provisions for Production Allowances in Schedule 5 of the PETROLEUM INDUSTRY BILL 2012, which give producers an allowance in accordance with their levels of production. As an example, under those provisions, small oil producers in onshore areas that produce less than 27,300 barrels of oil per day would be entitled to oil production allowances of the lower of US$ 30 per barrel or 30% of the official selling price.