The first quarter of 2022 has been eventful for the global oil and gas industry. With oil prices reaching their highest in a while, it appears that the industry is now in recovery from the Covid-19 Pandemic (“Pandemic”). Contributing to the increased oil prices is the fact that many countries are now opening their boarders and dropping the Covid-19 protocols they had put in place1.
This move has generally encouraged movement both domestically and internationally, increasing the demand for petroleum and related products. Russia’s war in Ukraine has also significantly impacted the price of crude oil, causing price to rise to an all-time high.
As a result of the invasion, many of the western countries imposed a ban on Russian oil and gas. The ban, together with the attack on Saudi Aramco’s Jeddah depot, caused a further spike in the price of crude to over $120 per barrel in the first quarter.
On a domestic level, Nigeria is witnessing assets divestments by International Oil Companies (IOCs), the inconclusive 2020 marginal fields bidding rounds and the operationalization of the Petroleum Industry Act (PIA).
With this eventful start, 2022 may signal the recovery for the Nigerian Oil and Gas Industry, bringing its performance to a level better than the pre-pandemic levels. This edition of the newsletter focuses on some noteworthy developments and the impact of these developments on the growth of the Nigerian Oil and Gas sector and the economy at large.
1. NURPC and the PIA Implementation Process
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has invited input/comments from lessees, licensees, permit holders, host communities, and other stakeholders in the Nigerian upstream petroleum sector. The notice, which was posted on the NUPRC website (former DPR website), called for input from the relevant parties within twenty-one (21) days from the date of the publication. The matters requiring input from the relevant stakeholders relate to several regulations covering Conversion and Renewal of OPL and OML Regulations, Petroleum Licensing Round Regulations, Upstream Petroleum Fees Regulations, Petroleum (Drilling and Production) Regulations, The Petroleum Royalty Regulations, The Gas Pricing Regulations, Definitions Regulations, Upstream Environmental Remediation Fund Regulations, Upstream Environmental Management Plan Regulations and The Host Community Development Fund Regulations. Please see the link to the regulations here.
Stakeholders are to review the proposed regulations and submit their input, as part of the process of consulting with the stakeholders prior to the finalization of the regulations, as stated in the PIA. The submissions are to be made on a comment sheet via email, also available on the website.
It is not yet clear what the impact of the proposed 18-month extension to the implementation of the PIA will be. Certainly, the PIA Implementation Committee has continued to work to ensure the operationalization of the PIA.
1 China has continued to impose lockdowns in Covid-pervasive areas, such as Shanghai.