Can you offer insights into recent significant legislative changes in Nigeria's oil and gas sector, especially the implementation of the Petroleum Industry Bill (PIB)?

JU: The PIB has since evolved into the Petroleum Industry Act (PIA) which was signed into law in August 2021. With the implementation of the PIA still in its early stages, the Nigerian oil and gas industry is witnessing the transition from the Petroleum Act (in place since November 1969) to the PIA framework. This transition has introduced new regulatory bodies like the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). However, delineating their respective jurisdictions and resolving issues like assignment and termination of interests under the new regime poses challenges. Some entities continue to operate under the Petroleum Act until they voluntarily transition to the PIA regime, impacting their fiscal obligations. We have advised the NUPRC on implementing the PIA, addressing issues like mandatory conversion timelines and lease termination criteria. Despite these challenges, there is a palpable sense of political will to reinvigorate the oil and gas sector, evidenced by the imperative for license holders to resume operations or face potential revocation. This dynamic environment underscores the need for adaptability and strategic decision-making as we navigate the evolving regulatory landscape.

IA: The flexibility inherent in the PIA was initially intended to facilitate a smooth transition; however, it has also introduced uncertainties regarding regulatory compliance and operational frameworks. As stakeholders grapple with interpreting and aligning with the provisions of the PIA, there is a recognition of the need for clearer guidelines and directives to ensure consistency and effectiveness in regulatory oversight. Specifically, in the realm of gas regulation, there has been a notable discrepancy between the intended scope of regulation and the actual language of the legislation, particularly concerning midstream and downstream operations. In response to these challenges, industry stakeholders, including ourselves, have actively engaged in dialogue and advocacy for amendments and clarifications to address these discrepancies and ensure regulatory coherence. The PIA has a strong focus on the upstream, with many provisions being ‘cut and pasted’ for the mid-and downstream, which has posed some problems. 

What are your perspectives on recent proposals, like the suspended Expatriate Employment Levy for foreign workers?

TA: The introduction of an employment levy in the oil and gas industry, particularly amidst a push for revenue generation, raises concerns about its potential impact on investor sentiment. While there may be intentions to promote local participation, the levy could deter FDI, which is crucial for industry growth. The swift suspension of this proposal indicates the government's responsiveness to industry feedback, which is commendable. We believe that maintaining a balanced approach is essential. 

Could you share your perspectives on the recent end of the fuel subsidy?

JU: The removal of the fuel subsidy has presented a complex scenario. While it was inevitable and overdue, the timing and execution raised questions. Skyrocketing prices and inflationary pressures have reverberated throughout the economy, due in part to the end of the subsidy. Perhaps a more synchronized approach between subsidy removal and refinery optimization could have mitigated some of these challenges. However, the introduction of competition through new market licenses offers a glimmer of hope for market stabilization. Overall, it is a tumultuous transition, and its long-term effects remain to be seen.

IA: We must acknowledge the larger context of infrastructural deficiencies and systemic challenges that exacerbate the impact of subsidy removal. Nevertheless, this bold step could pave the way for much-needed reforms in our energy sector, provided it is accompanied by strategic interventions to address immediate hardships.

TA: The subsidy removal reflects the government's recognition of the need for structural reforms to foster economic resilience and growth. While the short-term consequences are undeniable, we must assess this decision within the context of our long-term development trajectory. The government must demonstrate foresight and implement measures to mitigate the adverse effects, ensuring that the shockwave is temporary rather than prolonged. Although the road ahead may be challenging, this could mark a crucial step towards building a more sustainable and robust economy for future generations.