Petroleum Industry Bill (PIB) of Nigeria presentation delivered by Isaac Odedere in PH

1. Petroleum Industry
Act (PIA) of 2021
By Isaac Odedere

2. Petroleum Industry
Act (PIA) of 2021
By Isaac Odedere

3. Table of Contents
● Introduction
● Objectives
● Key provisions
● Fiscal Regimes
● Host community/PIA
● Oil discovery in Nigeria 1956 (Oloibiri)

4. Introduction

5. Introduction
● The PIA (PIB) was presented to the NA by Obasanjo administration two decades ago
to address and impose transparency and accountability in the petroleum sector.
● OPTS initially objected to the bill coupled with insincerity (ethnic bias) of Nigerians
towards it
● Different versions of the bill spread the floor of NA members
● At the end of the day, in 2015 amendment was made to the bill and split into four
parts
○ The Petroleum Industry Governance bill (PIGB)
○ The Petroleum Industry administration bill (PIAB)
○ The Petroleum Host Community Bill (PIHCB)
○ The Petroleum Industry Fiscal Bill (PIFB)
● There are two resulting bodies: The Nigerian Upstream Petroleum Regulatory
Commission and Midstream and Downstream Regulatory Authority.

6. Objectives

7. Objectives
1. Open, competitive and transparent
upstream awards
2. Rules for lifting crude, midstream
and downstream
3. Defined processes for shaves in
NNPC and xxx operations
4. Increase access to information
thanks to NEITI (The Nigerian
Extractive Industries Transparency
Initiative)
5. Clarity in Revenue flows
6. Better NNPC oversight and
corporate governance

8. Key objectives

9. Key Provisions
in PIA

10. Key Provisions in PIA
● The Minister of Petroleum Resources is the overall head in
petroleum matters, both locally and internationally
● Establishment of the Nigerian Upstream Petroleum Regulatory
Commision
● Establishment of the Nigerian midstream and downstream
petroleum regulatory authority
● Incorporation of the Nigerian National Petroleum Company Limited
with NNPC Limited. CAC under the companies and allied matters.
All assets and liabilities are to be transferred to NNPC ltd

11. Gratuity of licenses and leases
● PPL (Petroleum Prospective Licenses)
onshore/swamp ⥶ 6 years
● Deep offshore/frontier ⥶ 10 years
● PML (Petroleum Mining Licenses) ⥶ 20 years

12. Key Provisions in PIA (2)
● Abolition of gas flaring?
○ Adherence to the law now
● Domestic gas obligation
○ Natural gas master plan => Dometic Gas Obligations (DGSO)
● Deregulation of the downstream sector
○ The authorities to oversee tariffs for pipelines, bulk storage, etc.
● Petroleum host community fund. Social and economic
benefits to the host communities

13. Fund
allocation
● 2.5% of E & P company opex into the fund
● 75% of the endowment fund => capital fund
● 20% Reserve fund
● 50% goes to administrative fund
● Where there is sabotage or vandalism to installation, the
host community will forfeit the funds and bear the cost of
repairs
● All mid and downstream operators are to incorporate
HCDT otherwise licenses will be revoked
● Board of trustees => CAC for registration

14. Fiscal
Regimes

15. Fiscal Regime
No more petroleum profits tax but
Nigeria hydrocarbon tax (NHT)
Onshore & shallow water is 50%
Deep offshore/frontier is 25% Corporate tax is 30%

16. Fiscal Regime
(continued)
Royalties: Depends on
production and price
Production onshore areas is
15%
Shallow water is 12.5% Frontier basics & deepshore is
7.5%

17. Price
● Below $50 per barrel => 0%
● At $100 per barrel => 5%
● Above $100 per barrel => 10%
● Frontier exploration 3% of project fund
● Oil and profit gas of NNPC limited

18. Host
Community/PIA

19. Host Communities
● Involvement of government to be minimized
● Lack of timeframe
● Global mou by companies with multiple settlors
● Inadequate community representation
● Funding concerns

20. Host Communities (2)
● Companies and community hostilities
○ Crude oil theft vandalization of pipelines and shutdown of wells results in
inability to meet OPEC quota (1.3 million to 1.5 million => 800,000bopd)
● Past Intervention by government
○ Derivation fund 13% of oil revenue from federation account
○ Creation of the ministry of niger delta in 2008 with a budget allocation of
584 million naira
○ Creation of Niger Delta Development Commisiion (NDDC) with 3% of the
total annual budget of oil producing companies
○ Now, host communities development trust (HCDT) => MoU by
multinational companies -> corporate social responsibility (CSR).

21. Conclusion

22. Conclusion
● Harmony between host community and operator
● Trust will reign
● Management of the funds matter
● Transparency and monitoring of community funds

23. Areas to be addressed
● Dispute resolution
● Definite contribution of mid/downstreams to the fund partnership by
operators
● Laudable objectives if implemented well => monitoring
● Economic model available in the industry

24. Thank you