Stakeholders in Nigeria’s gas sector under the aegis of Nigerian Gas Association (NGA) have listed areas in the Petroleum Industry Act (PIA) that require urgent reconsideration, clarification and amendment for the realisation of optimum value.
Some of the areas needing clarification and amendment, as pointed out by the NGA include issues around domestic gas delivery obligations, lack of clarity on licensing requirements for midstream and downstream gas, and potential overlap in the roles of the two new agencies.
Other contentions areas, according to the group are the exclusion of the industry or private sector representation on the governing council of the midstream and downstream gas infrastructure fund and the lack of clarity on transition from a regulated to a market-based gas pricing regime.
The NGA in a communiqué signed by its President and Managing Director of Shell Nigeria Gas, Mr. Ed Ubong, after its meeting, stated that certain provisions of the PIA required further engagement and clarification to ensure unambiguity in their implementation.
NGA raised concerns on the nature and extent of domestic gas delivery obligations and the scope of the discretion to be wielded by the regulators, given the commercial, contractual, technical and financial considerations underlying investments to meet such obligations.
On licensing requirements as stipulated in the Act, the NGA maintained that there is lack of clarity on the specific terms for the licensing of midstream or downstream gas or petroleum liquids post the 18-month transition period.
The group further pointed out that there are potential overlaps in the roles of the Nigerian Upstream Petroleum Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Authority (NMDRA) in the Act.
“The PIA imposes an obligation on upstream operators under the regulatory purview of NUPRC as well as holders of other licenses or permits, who are also engaged in activities in midstream or downstream gas operations prior to the effective date of the PIA to apply to NMDRA within 18 months from the effective date of the PIA for the appropriate licenses or permits, as applicable,” it stated.
On gas pricing, the gas association said the PIA needed to be more specific about time-bound triggers for transitioning from a regulated to a market-driven (willing-buyer-willing-seller) pricing framework, saying this would ensure that investments could be made with definitive and applicable fiscal terms.