AUTHOR: JOSEPH ONELE
Legal Practitioner at Olaniwun Ajayi LP, The Adunola, Plot L2, 401 Close, Banana Island, Ikoyi, Lagos, Nigeria.
This article seeks to proffer practical recommendations that will help to develop a very formidable and well-performing oil sector in Nigeria. These recommendations were triggered by the brainstorming session attended by the author on, 14 January 2017 at the Hilton Hall, Aberdeen, United Kingdom, on the New Oil and Gas Policy for Nigeria, the ‘7 Big Wins,’ where leading professionals from Africa and Europe gathered to discuss, review and make recommendations on the new Oil and Gas Policy, being driven by the Nigerian Ministry of Petroleum Resources, ‘aimed at developing a stable and enabling oil and gas landscape with improved transparency, efficiency, stable investment climate, and a well-protected environment.’
Starting with recommendations on sector financing as well as the legal framework for the oil and gas sector in Nigeria, these high-level comments proceed to make pragmatic suggestions on the making of a commercially viable Nigerian National Oil Company (NNOC). It equally considers best practices that Nigeria can adopted in Health, Safety and Environment (HSE) Regulations, given the Petroleum Industry Bill currently pending before the National Assembly. Thereafter, the article succinctly considers what can be done to develop human resources in the oil and gas industry in Nigeria, with a view to having more competent hands manage the industry for the betterment of all. Relevant recommendations were also made in respect of internal and external communication. Finally, this article concludes with relevant recommendation on improving transparency and accountability in the Nigerian Oil Industry.
It should be noted, however, that the recommendations made in this article are not exhaustive as a lot can still be done to restore Nigeria’s seemly lost glory in the oil and gas sector. As a matter of fact, some of the issues identified in this article will be dealt in more specific details in subsequent publications by the author.
SECTOR FINANCING AND LEGAL FRAMEWORK
Given the pending Petroleum Industry Bill (PIB) before the National Assembly, there is a need to ensure that the NNOC is run as a commercially viable entity like the Angolan National Oil Company (Sonangol), capable of making profits and becoming a market leader. Hence, it is suggested that the new commercial body be exempted from the operation of the Treasury Single Account (TSA). There is also a need to specify a minimum qualification for certain key positions in the oil sector regulatory body and the NNOC.
It is very imperative for Nigeria to be more pragmatic in her approach to HSE regulation, particularly, in relation to offshore activities. Hence, it is also recommended that given the ongoing legislative consideration of the PIB, more legislative guidance should be provided in steering Nigeria’s HSE regulation towards a hybrid approach between the goal setting (safety case) and prescriptive to HSE regulation championed majorly by the United Kingdom (UK) and the United States (US) respectively. This recommendation becomes very apposite given that no system in the world is flawless. However, it is believed that striking a balance between the two approaches will greatly assist the Nigerian HSE regulator in ensuring that the lives of the industry workers are placed before anything else.
The foregoing recommendation becomes very pertinent given the recent BP’s Deepwater Horizon oil spill disaster in the Gulf of Mexico, which has created a global awareness of the need for a more effective regulatory method to prevent such disasters. There is no gainsaying the fact that Nigeria will benefit greatly from a hybrid of the UK and the US regulatory approaches to HSE. After all, one is often better of learning from the ‘mistakes’ (experiences) of others.
More importantly, lots of relevant lessons can be drawn from the United Kingdom (UK)’s goal setting – safety case method of regulating HSE (offshore) which promotes the propositions that: those who create risks are responsible for controlling those risks; safe operations are achieved by setting and achieving goals rather than by following prescriptive regulations and that all risks must be reduced such that they are below a threshold of acceptability (see also John Paterson ‘Health and Safety at Work Offshore, Oil and Gas Law Second Edition, University of Dundee, 2011 187-230). Thus, it is left for Nigeria to prove wrong the assertion in certain quarters that: ‘Experience worldwide suggests that it often requires a major accident to focus the attention of industry, government and legislators on shortcomings in existing regulatory controls and to provide the stimulus for a fundamental review.’
DEVELOPING NATIONAL HUMAN RESOURCES
In developing adequate human resources, competent to serve the Nigerian oil industry, it is important for the government to become more proactive and partner more with both the international oil companies (IOCs) such as Shell, Chevron, Total, ExxonMobil, indigenous oil companies such as Seplat, and other federal government scholarship bodies like the NLNG and PTDF, which are currently offering scholarship for Nigerian students.
It is equally essential for the Nigerian government to sponsor more Nigerians for advanced training in relevant areas that will be of great relevance to the Nigerian oil industry through the PTDF, NLNG, Commonwealth and even the Federal Scholarship schemes. Such awardees should be made to sign bonds to return to Nigeria and work for a certain number of years or pay back the award sum in the event they refuse to return to Nigeria and work for a minimum number of years, upon completion of their studies. It is believed that such opportunities for trainings, both in and outside Nigeria, will create a good platform for bringing together the best trained Nigerian minds that will provide Nigeria with the skilled human capital she needs in the development of the oil industry.
In addition, more avenues should be created to bring together Nigerian professionals currently in; Diaspora, Europe and other parts of the world. A lot can be gained from their wealth of experience. Whilst most may not return to Nigeria immediately, it is believed that Nigeria can benefit largely from them by tapping from their wealth of knowledge and ‘technical-know-how.’ It is equally important for the Nigerian Content Development and Monitoring Board to not only keep promoting local content but also ensure that the oil companies, particularly the IOCs, comply with the Nigerian Oil and Gas Industry Content Development Act 2010.
INTERNAL & EXTERNAL COMMUNICATIONS
It is recommended that journalists, media houses and media experts in Nigeria be managed properly. Efficient hands and 21st-century-minded experts should be employed in this regard. Government can no longer afford to be on the bad side of the news – ‘bad news is definitely bad for business. There is a need to manage the Niger-Delta crisis more. It is quite promising that President-Buhari-led-government has adopted a peaceful means to the resolution of the age-long crisis. However, this should be given more publicity. Government should inform the public more of the efforts it is making; such good news should be given the publicity they deserve. Negative publications reflective of the poor security state of Nigeria are not only capable of scaring away investors but even negatively affecting the credit rating of Nigeria. Hence, government and other stakeholders should manage both the internal and external communications affecting the oil industry more effectively and efficiently.
TRANSPARENCY AND ACCOUNTABILITY
The Nigeria Extractive Industries Transparency Initiative (NEITI) established pursuant to the NEITI Act 2007 should be supported more in its full implementation of the Beneficial Ownership Disclosures in the Oil Industry in Nigeria (BODOIN) in accordance with the EITI Standards. In addition, NEITI should be encouraged also publish audit reports annually as this will greatly promote greater transparency and accountability in the Nigerian Oil Industry.
Whilst the Nigerian Oil and Gas Industry may be quite far from where it ought to be, one may rightly assert, given some of the significant efforts made in recent times (including the recent discussion on the PIB, NEITI amongst others) and some goodwill shown by some past and present leaders as well as stakeholders in the industry, that Nigeria is well positioned to take its rightful place in the comity of vibrant oil producing nations who will put an end to the much-talked-about ‘resource curse’, which has deprived most oil producing nations of reaping the benefits of their naturally endowed resources. The future surely holds lots of good tidings for Nigeria, if only more emphasis will be placed on having more capable hands (capacity building), very competitive industry that can meet up with the demands of the 21st century and goodwill on the part of the leaders as well as the relevant stakeholders, while ensuring that all Nigerians, directly or indirectly, benefit from the nations’ seemly abundant resources.
Joseph Onele, graduated with First Class Honours from the University of Ibadan, where he was named a University Scholar for five consecutive years and was also a recipient of both the Federal Government Scholarship and Chevron National Merit Award for Academic Excellence. He is currently a Legal Practitioner at Olaniwun Ajayi LP, Lagos; firstname.lastname@example.org https://ng.linkedin.com/in/josephonele
Note: This publication represents only the personal views of the author and is provided to highlight issues as well as for general information purposes only. Whilst reasonable steps were taken to ensure the accuracy of information contained in this publication, the author does not accept any responsibility for any loss or damage that may arise from reliance on information contained in this publication.