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Misgivings Surround Proposed Reform of NNPC and the Oil and Gas Industry in Nigeria

during the reform transition period. In addition, there is a Gas Master Plan. The Gas Master Plan aims to address some of the key challenges confronting the Nigeria gas sector, notably that of inadequate infrastructure and

May 2009, Volume 22 Issue #5
At the inception of the Yar’Adua regime, a policy initiative aimed at reorganizing the Nigerian National Petroleum Corporation (NNPC) was announced. The key aspects of the reform proposal include the creation of three regulatory agencies, one commercial centre, one research and training centre, one manpower training centre, two fund organisations, such as the Petroleum Equalization Fund and Petroleum service. The reform proposal would also provide for the conversion of all existing joint ventures into Incorporated Joint Ventures(IJVs). Each IJV will be a corporate entity to be incorporated under the laws of the Federal Republic of Nigeria, and the incorporation and process including with capilisation the Technology Development Fund, as well as one frontier exploration

commercial framework, which has had a strong impact on the ability of the sector to supply as rapidly as the market opportunity dictates. In the view of the government, the reform process was informed by the fact that the existing structures in the oil and gas industry are no longer relevant to Nigeria, bearing in mind the technology dynamics industry. It of the was global odd petroleum that the

government would announce radical changes to the regulation of the oil and gas industry without legislative backing and input by operators in the industry. However, nearly two years after making news, the proposals have received sceptical appraisals from various sectors of the oil and gas industry in Nigeria. Indeed, the major misgiving about the Federal Government’s oil and gas reform agenda is that it may burden the already troubled sector with more problems.

restructuring will be carried out through negotiations respective

©Blackfriars LLP 2009. All rights reserved. This document is for general guidance only. Definitive advice should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative office in Toronto, Canada.

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Some of the problematic areas of the new policy proposals include the proliferation of regulatory bodies in the industry. There are strong indications that the proposed reforms would create multiple regulatory bodies with overlapping and conflicting functions among the agencies. The proposed reform is a template for the replication of the mistakes emblematic of the Production Sharing Contracts (PSCs) of the 1990s in which Nigeria lost huge revenues through the PSC while the oil companies Secondly, were unlike the what beneficiaries. obtains in

Dr. Virtus Igbokwe Tel: +234 802 220 4755 Email: Virtus@blackfriars-law.com Fax: +1 646 536 8978
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Venezuela and Malaysia, community participation has been erased from the system. Given the crisis and insecurity in the Niger Delta, the omission of community participation in the oil and gas industry would not help the government to achieve the desired goals.

For further inquiries, please contact: Ms. Nkeiru Onyeaso Tel: +234 808 718 0833 Email: Nkay@blackfriars-law.com Fax: +1 646 536 8978

©Blackfriars LLP 2009. All rights reserved. This document is for general guidance only. Definitive advice should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative office in Toronto, Canada.