Five years after the Petroleum Industry Act (PIA) restored greater regulatory certainty to Nigeria’s oil and gas industry, stakeholders said the Federal Government has not converted the investment confidence created by the law into actual capital deployment, higher production and stronger energy security.

The assessment, which emerged from a review of the PIA’s five-year journey, points to a widening distinction between the regulatory progress recorded since 2021 and the industry’s ability to translate that progress into additional barrels, gas supply and economic value.

Speaking at the PENGASSAN Energy and Labour Summit in Abuja yesterday, a member of the union, Solomon Orieji, said one of the Act’s major achievements was its intervention at a critical point when uncertainty over some of Nigeria’s major deepwater assets was threatening future investment.

Orieji explained that five major deepwater assets, which account for about 80 per cent of Nigeria’s deepwater production, were developed under commercial agreements signed in 1993 for 30 years.

With the agreements approaching expiry by 2023, he said investors faced uncertainty over the legal framework that would govern the continuation of their interests and future capital commitments.

According to him, the PIA, enacted in 2021, helped to resolve the uncertainty and subsequently created a framework for the renewal and renegotiation of the production sharing contracts.

He said the development represented a major investment gain because investors would have been reluctant to commit additional capital to assets whose contractual future was uncertain.

Orieji, however, cautioned against measuring the success of the PIA solely by the regulatory certainty it created.

“Have we made progress? Yes. Has the Act changed anything? Yes. Are we where we are supposed to be? Obviously no,” he said.

For Dr Mohammed Malah, the next measure of success must be the extent to which the regulatory framework actually delivers investment and production.

Malah said the PIA had achieved significant institutional reforms, including clearer separation of upstream, midstream and downstream functions, restructuring of the Nigerian National Petroleum Corporation into a commercial entity and the incorporation of host communities into the petroleum framework.

But he warned that the legal framework alone could not produce additional barrels.

“The law itself does not produce a barrel,” he said, stressing that investment, infrastructure, human capacity, technology and effective implementation were required to translate reform into industry performance.

Malah therefore argued that the most important indicators of the PIA’s success should be the amount of capital committed and spent, production growth and the value ultimately delivered to the Nigerian economy.

He cautioned that investment announcements should not be confused with actual capital deployment, noting that financing costs, security challenges, infrastructure constraints and the maturity of existing assets would continue to influence investment decisions and production.

He also proposed the publication of a public PIA implementation outcomes scorecard to track measurable results from the reform, including regulations issued, licenses processed, approvals granted, investment decisions and other outcomes.

According to him, such a scorecard would provide a clearer basis for determining whether the reforms were translating into the desired changes in the sector.

Providing evidence of the investment response already generated by the Act, Okechukwu Nwankwo said the PIA had produced positive outcomes through a more predictable, statute-backed regulatory regime and the issuance of more than 20 regulations.

He cited new final investment decisions and gas projects, including the Indorama Train 3 Plant, Odum Energy, Ovade GPP, AGPCL and SIGP, with the projects having a combined processing capacity of about 810 million standard cubic feet.

Nwankwo also said the Midstream and Downstream Gas Infrastructure Fund (MDGIF) had invested more than N570 billion and catalysed over N2 trillion in investment.

He said the figures demonstrated that the PIA had begun to influence investment decisions, particularly across the gas and midstream segments.

However, Nwankwo said the next phase of implementation would require stronger attention to market architecture, energy security and regulatory delivery.

He identified outstanding issues around open and third-party access, tariffs, pricing, licences, transparency, feedstock supply and strategic petroleum stocks as areas requiring further action if the investment response is to deepen.

He said the industry needed a framework capable of guaranteeing feedstock supply, supporting market access and providing appropriate incentives for investors across the petroleum value chain. (The Guardian)

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