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

oil

companies

(IOCs)

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

May 2009, Volume 22 Issue #5

infrastructure

and

commercial framework, which has had a

At the inception of the Yar’Adua

strong impact on the ability of the sector

regime, a policy initiative aimed at

to supply as rapidly as the market

reorganizing

opportunity dictates.

the

Nigerian

National

Petroleum Corporation (NNPC) was announced. The key aspects of the

In the view of the government, the

reform proposal include the creation of

reform process was informed by the fact

three

one

that the existing structures in the oil and

commercial centre, one research and

gas industry are no longer relevant to

training centre, one manpower training

Nigeria, bearing in mind the technology

centre, two fund organisations, such as

dynamics

the Petroleum Equalization Fund and

industry. It

Petroleum

Development

government would announce radical

Fund, as well as one frontier exploration

changes to the regulation of the oil and

service.

gas industry without legislative backing

regulatory

agencies,

Technology

of

the was

global

petroleum

odd

that

the

and input by operators in the industry. The reform proposal would also provide for the conversion of all existing joint

However, nearly two years after making

ventures

Joint

news, the proposals have received

Ventures(IJVs). Each IJV will be a

sceptical appraisals from various sectors

corporate entity to be incorporated

of the oil and gas industry in Nigeria.

under the laws of the Federal Republic

Indeed, the major misgiving about the

of

Federal

into

Nigeria,

Incorporated

and

the

incorporation

Government’s

oil

and

gas

and

reform agenda is that it may burden the

restructuring will be carried out through

already troubled sector with more

negotiations

problems.

process

including with

capilisation the

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

Dr. Virtus Igbokwe Tel: +234 802 220 4755 Email: [email protected] Fax: +1 646 536 8978

that the proposed reforms would create

This newsletter has been sent to you by

multiple

with

BLACKFRIARS LLP, a full-service law firm, in

overlapping and conflicting functions

the genuine belief that its contents would be of

regulatory

bodies

among the agencies. The proposed reform is a template for the replication

interest to you. If you have received this newsletter incorrectly, or if you do not want to receive

further

information

about

legal

of the mistakes emblematic of the

developments in Nigeria and West Africa,

Production Sharing Contracts (PSCs) of

please accept our apologies. To unsubscribe

the 1990s in which Nigeria lost huge

from future newsletters from BLACKFRIARS

revenues through the PSC while the oil companies

were

Secondly,

unlike

the

beneficiaries.

what

obtains

LLP please send an email to [email protected] with "unsubscribe" in the subject line.

in

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: [email protected] 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.