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international oil companies (IOCs)
during the reform transition period.
Misgivings Surround Proposed In addition, there is a Gas Master Plan.
Reform of NNPC and the Oil and The Gas Master Plan aims to address
Gas Industry in Nigeria some of the key challenges confronting
the Nigeria gas sector, notably that of
inadequate infrastructure and
May 2009, Volume 22 Issue #5
commercial framework, which has had a
At the inception of the Yar’Adua strong impact on the ability of the sector
regime, a policy initiative aimed at to supply as rapidly as the market
reorganizing the Nigerian National opportunity dictates.
Petroleum Corporation (NNPC) was
announced. The key aspects of the In the view of the government, the
reform proposal include the creation of reform process was informed by the fact
three regulatory agencies, one that the existing structures in the oil and
commercial centre, one research and gas industry are no longer relevant to
training centre, one manpower training Nigeria, bearing in mind the technology
centre, two fund organisations, such as dynamics of the global petroleum
the Petroleum Equalization Fund and industry. It was odd that the
Petroleum Technology Development government would announce radical
Fund, as well as one frontier exploration changes to the regulation of the oil and
service. gas industry without legislative backing
and input by operators in the industry.
The reform proposal would also provide
for the conversion of all existing joint However, nearly two years after making
ventures into Incorporated Joint news, the proposals have received
Ventures(IJVs). Each IJV will be a sceptical appraisals from various sectors
corporate entity to be incorporated of the oil and gas industry in Nigeria.
under the laws of the Federal Republic Indeed, the major misgiving about the
of Nigeria, and the incorporation Federal Government’s oil and gas
process including capilisation and reform agenda is that it may burden the
restructuring will be carried out through already troubled sector with more
negotiations with the respective problems.

©Blackfriars LLP 2009. All rights reserved. This document is for general guidance only. Definitive advice
should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative
office in Toronto, Canada.
WWW.BLACKFRIARS-LAW.COM
Some of the problematic areas of the
new policy proposals include
proliferation of regulatory bodies in the
industry. There are strong indications
that the proposed reforms would create
multiple regulatory bodies
overlapping and conflicting functions
among the agencies. The proposed
reform is a template for the replication
of the mistakes emblematic of the
Production Sharing Contracts (PSCs) of
the 1990s in which Nigeria lost huge
revenues through the PSC while the oil
companies were the beneficiaries.
Dr. Virtus Igbokwe
the Tel: +234 802 220 4755
Email: Virtus@blackfriars-law.com
Fax: +1 646 536 8978
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Secondly, unlike what obtains in

Venezuela and Malaysia, community
participation has been erased from the
system. Given the crisis and insecurity
in the Niger Delta, the omission of
community participation in the oil and
gas industry would not help the
government to achieve the desired
goals.

For further inquiries, please contact:

Ms. Nkeiru Onyeaso

Tel: +234 808 718 0833
Email: Nkay@blackfriars-law.com
Fax: +1 646 536 8978

©Blackfriars LLP 2009. All rights reserved. This document is for general guidance only. Definitive advice
should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative
office in Toronto, Canada.