Can Nigeria’s new oil & gas regulations sanitise market?

Nigeria recently introduced six new regulations aimed at sanitising its oil and gas sector. These regulations are designed to tighten the reins on operators who engage in loading petroleum liquids in unauthorised locations and those who fail to install standard measuring devices on their facilities. Temitope Kolade, Senior Manager of the Power, Oil, and Gas Unit at Andersen, shed light on the significance of these regulations during a recent interview with CNBC Africa. Regulations play a vital role in providing clarity to operators within the industry, particularly in the wake of the 2021 Petroleum Industry Act. The Nigerian Midstream and Downstream Petroleum Regulatory Authority now wields the authority to issue regulations that guide the transfer and assignment of licenses and permits. These regulations cover a wide array of areas including gas pricing, petroleum operations, tariff for natural gas pipelines, petroleum transportation, and shipment, as well as the measurement and allocation of petroleum products. One of the crucial aspects of the new regulations is the emphasis on regulatory clarity and transparency. Kolade noted that the regulations are detailed and explicit, offering schedules and interpretation sections to ensure operators fully understand their obligations. The regulations also address technological adaptation, requiring companies to seek approval from the authority before introducing new technologies to ensure compliance with Nigerian standards. A key area of concern for many in the industry is the enforcement of sanctions and penalties for non-compliance. While the regulations outline offenses and penalties, the efficacy of enforcement lies in the commitment of the regulatory authority to monitor and penalize defaulters. Kolade emphasized the importance of the authority's proactive approach in enforcing sanctions to maintain market integrity. Capacity building within the regulatory body is another crucial factor for effective implementation of the regulations. As the regulatory framework expands with the development of additional regulations, concerns arise about potential overregulation. However, Kolade argued that in a sector as critical as oil and gas, clear and comprehensive regulations are indispensable to ensure the safety and efficiency of operations. Looking ahead, Kolade highlighted areas where further regulatory clarity is needed, such as host community development and the management of levies paid to the authority. He stressed the importance of ongoing dialogue between stakeholders to address emerging issues and ensure that the regulatory framework remains robust and effective. As Nigeria continues to advance its oil and gas sector through new regulations, the industry is poised for a period of transformation and heightened accountability. The stringent regulatory framework aims to instill confidence in stakeholders, promote responsible practices, and ultimately drive sustainable growth in Nigeria's oil and gas market.