Module 1 Transcript.docx

THE PETROLEUM INDUSTRY ACT (PIA) COURSE 1 Welcome Welcome to the Petroleum Industry Act (PIA) Immersion course. What would you like to be called in this course? Fill this into the box on the screen. 2 Introduction Hello **Learner Name** My name is Kiki, and I am here to help you better understand th...

THE PETROLEUM INDUSTRY ACT (PIA) COURSE 1 Welcome Welcome to the Petroleum Industry Act (PIA) Immersion course. What would you like to be called in this course? Fill this into the box on the screen. 2 Introduction Hello **Learner Name** My name is Kiki, and I am here to help you better understand the Overall Structure of the PIA and familiarise yourself with the Issues it is designed to address. Click start, and let's begin. 2.5 Course Tour Standard Navigation Tour… Watch out for mind sparks. Let's spark with memory recalls for concepts we learn through the course. You might collect enough gems to earn The Petroleum Industry Act shields At the end of every module, there is a short Quiz to gauge your level of understanding. Attempting the Quiz helps to demonstrate your understanding of the PIA Immersion program”. Additionally, please refer to the glossary to familiarise yourself with certain terms used in this course 3 Course Objectives At the end of these Modules, you will be able to : Outline the aims and objectives of the Petroleum Industry Act (PIA) Examine the Structure of the act. Identify the Issues addressed by the act. 4 Course Outline For ease of understanding, this course has been broken into the following modules: Module One: Background and Introduction to Petroleum Industry Act (PIA) Modules two: Governance and Institutions Modules three: General Administration [Administrative Framework] Modules four: Host Community Development Modules five: Petroleum Industry Fiscal Framework Modules six: Miscellaneous Provisions Schedules Now, let's dive into the course. Click to begin. MODULE ONE Background of Petroleum Industry Act 2021 5 Outline Background of the Petroleum Industry Act (PIA) Introduction to Petroleum Industry Act (PIA) Background of Petroleum Industry Act 2021 6 Background to the PIA The effort to reform the Petroleum Industry began in 2000 and took 21 years to complete. Three earlier versions existed but were never made public. The reform began with establishing the Oil and Gas Sector Reform Implementation Committee (OGIC) to superintend needed petroleum industry reforms in Nigeria. The OGIC worked for several years and developed the Nigerian Oil and Gas Policy. It also commenced the process of reviewing salient points related to the Petroleum Industry Act. At the time, industry uncertainties led to its stagnation. However, following the adoption of the National Oil and Gas Policy, the reform process began, and a drafting committee was established. It transitioned from OGIC to Inter-Agency team in 2019, where the PIB was redrafted, harmonized, and again sent to the National Assembly as a legislative bill. President Muhammadu Buhari signed the bill into law on August 16, 2021. 7 Salient Issues the PIA 2021 seeks to address The Petroleum Industry Act 2021 in Nigeria seeks to address several issues in the Nigerian oil and gas industry, including: The restructuring of the Nigerian National Petroleum Corporation (NNPC) into a commercially focused entity Fundamental reform of the administrative and regulatory regime and petroleum institutions. A revised and reduced Ministerial role. The establishment of a new fiscal framework for the oil and gas industry and a new tax regime The creation of a new legal framework for managing Nigeria's oil and gas resources, including establishing a new legal framework for awarding oil and gas licenses and leases. A more effective way of handling disputes arising from the operations of the Act. Provision of direct social and economic benefits from petroleum exploration to host communities, and the enhancement of peaceful and harmonious coexistence between licensees or lessees and host communities These changes are aimed at increasing transparency, eliminating corruption, and improving the efficiency of the Nigerian oil and gas industry. 8 Concepts Some concepts existed, and laws were enacted to support them. One of these is the process that defined the different segments of the industry, namely the upstream, which dealt with exploration and production of crude oil and natural gas, the midstream - where storage and processing falls under, and the downstream, which dealt with distribution and transportation of petroleum products.   Essentially, these laws have a long history. For example, the upstream laws have mostly derived from the petroleum act in 1969 and the petroleum profits tax act in in 1958. Others were the Oil Terminal dues Act 1965, Oil Pipelines Act 1956, Oil and Gas Pipeline Regulations etc. These laws, subsequently amended, had developed some obsolescence. Many reviews and changes were made to the Law amendments, etc. Other areas that required policy review towards new legislation include: Midstream Value Chain For Gas, there were: Fiscal Terms Flare Elimination Transparency Governance Framework Decommissioning and Abandonment Environmental Remediation There was a need to cascade these experiences into a brand-new law. To do so, the policy that drives any potential changes needed to be reviewed, and potential changes that could not be dealt with administratively were incorporated into a body of laws. The Highlights of the journey 9 Key highlights of the PIA 2021's journey Some key highlights of the PIA 2021's journey from 2000 to 2021 include: 2000: President Obasanjo established the Oil and Gas Implementation Committee in 2000, which marked the beginning of the process (OGIC) 2008: The Petroleum Industry Bill's first executive bill was forwarded to the sixth assembly. 2012: The 7th National Assembly received a new draft, which was only passed by the House of Representatives. 2017: The bill was later split into four separate bills- Petroleum Industry Governance Bill (PIGB), Petroleum Industry Fiscal Bill (PIFB), Petroleum Industry Administrative Bill (PIAB) and Petroleum Host Community Bill (PHCB). 2018: The PIGB was passed by the National Assembly in April 2018 but did not get presidential assent 2020: The four separate bills re-emerged as a single bill (Executive bill) 2021: The National Assembly passed the Petroleum Industry Bill, and it received Presidential approval on 16th August 2021 The PIA 2021 aims to address the sector's governance, transparency, and accountability issues and encourage greater participation by Nigerian firms in the industry. It also created a new regulatory body, the Nigerian National Petroleum Company Limited (NNPC Limited), which took over the assets, interests and liabilities of the defunct Nigeria National Petroleum Corporation (NNPC). Introduction to the Petroleum Industry Act 2021 10 Introduction Petroleum Industry Act (PIA) 2021 was enacted in August 2021. The Act was designed to tackle ageing problems in the Nigerian Oil and Gas Industry The Petroleum Industry Act (PIA) comprises 319 Sections and 8 Schedules. The Sections are divided into 5 Chapters, namely: 1. Governance and Institution, 2. Administration, 3. Host Community Development 4. Petroleum Industry Fiscal Framework. 5. Miscellaneous Provisions. 11 Objectives of PIA The purposes of the Petroleum Industry Act (PIA) are to: Promote economic growth through increased investments to drive oil and gas production growth and strong investments in midstream gas infrastructure to increase gas-based power generation and industries. Promote frontier exploration. Establish an effective and predictable acreage management system. Enhance the regulatory framework and enshrine transparency & accountability. Transform NNPC into a viable commercially focused and self-sustaining national oil company. Create a strong regulatory framework with increased emphasis on midstream development. Create an effective midstream and downstream licensing system. Promote improved environmental measures. Assist host communities in petroleum operation areas to achieve their aspirations. The Petroleum Industry Act (PIA) was also set up to completely reorganise the framework of the governance system that defines the petroleum industry. There was a need to separate the functions of policymaking, the regulatory system, and the commercial operations to clearly understand the Petroleum Industry Act (PIA). The PIA prescribes the separation of policy, regulation, and commercial operations. This reflects the final stages in the reform that began in 1984 the demerger of the Department of Petroleum Resources (DPR) from the Nigerian National Petroleum Corporation (NNPC). The regulatory functions have now been subdivided into: The Commission, for technical & commercial regulation in the Upstream; and The Authority, for technical & commercial regulation in the Midstream and Downstream Commercial Operation is within the purview of the new National Oil Company (a limited liability company) The policy arm remains the Ministry of Petroleum Resources with the Minister responsible for articulating the policy and ensuring compliance. 12 New Regulatory Institutions functions and objectives There is a regulatory shift away from a unified technical regulation, where the Department of Petroleum Resources (DPR) catered to the upstream, midstream, and downstream. Before the PIA, the National Petroleum Investment Services (NAPIMS) and the Department of Gas commercial regulation oversaw upstream regulation, the Petroleum Products Pricing Regulatory Agency (PPPRA) oversaw commercial regulation in the midstream, while the Petroleum Equalisation Fund (PEF) handled tariff administration - ensuring price uniformity across the distribution chain. The PIA has now established two regulatory bodies: the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), also known as the Commission for technical and commercial regulations in the upstream, and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Authority, which is in charge of technical and commercial regulations in the midstream and downstream. 13 Value Propositions of the PIA 2021 In summary, the PIA 2021offers value in the following ways: It establishes good governance. It encourages competitiveness. It promotes Global best practices and It enhances the Ease of doing business in Nigeria Some of the Guiding Principles which policy formulators bore in mind were: To ensure a clear separation of roles To ensure a win-win revenues split between Government & Investors To simplify governance and administration To ensure Equity and fairness To promote Transparency, Accountability and Responsiveness To ensure global best practice in operations and To ensure Sustainability 14 Stakeholder Value Propositions of PIA The Petroleum Industry Act 2021 Stakeholder Value Propositions are the benefits that various stakeholders, such as the government, industry operators, and the general public, can derive from the Act's implementation. Click on each stakeholder to learn more about the PIA's potential benefits to them. The government Industry operators The general public Investors Communities Click on each to learn more. The government: The Act helps the government create policies and regulations that promote the sustainable development of the petroleum industry, while also ensuring compliance with laws and agreements, and protecting the rights of Nigerians. Industry operators: The Act provides industry operators with a clear regulatory framework that promotes investment, innovation, and competitiveness in the industry. It also creates a stable and predictable business environment where operators can conduct business. The general public: The Act aims to provide direct social and economic benefits to Nigerians from the exploration and exploitation of the country's abundant natural oil and gas resources, such as infrastructure, healthcare, and education. Investors: The Act provides a clear and transparent framework that promotes investment in the petroleum industry, by providing a stable and predictable business environment and creates more opportunities for investment in the sector. Communities: The Act aims to ensure that all petroleum industry operations are conducted in a manner that is socially and environmentally responsible and that they benefit the host communities. It promotes host community engagement and participation and provides a mechanism for addressing and resolving environmental destruction or degradation. It emphasizes immediate remediation and the imposition of penalties for environmental pollution. 15 Module Summary We have now come to the end of this module. Before we proceed, let’s remind ourselves of the key points we learned: The Petroleum Industry Act (PIA) separates policy, regulation and commercial operations. The Commission is the technical and commercial regulator for the upstream while the authority is the technical and commercial regulator for the midstream and downstream. The New National Oil Company (A Limited Liability Company), is purely commercial focused The policy arm remains the Ministry of Petroleum Resources 16 Module closing slide Well done! You have come to the end of the module. We trust this has been an exciting learning experience for you thus far. Let’s proceed to the next Module!