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Abstract
This article critically assesses the regulatory landscape for oil and gas development proposed under the 2017 Nigeria gas and petroleum policies, which are together referred to as the Nigeria Oil and Gas Policy (NOGP) 2017, to highlight its capacity to lead to the achievement of regulatory excellence in the oil and gas industry in Nigeria. The assessment is based on a conceptual framework developed by the Penn Program on Regulation (PPR) at the University of Pennsylvania Law School in 2015 to assist the Alberta Energy Regulator – the body responsible for regulating energy development in Alberta, Canada – to identify the best regulatory approach to overcome the challenges of regulating energy development in the province. The PPR framework is selected not only because it is based on a detailed and systematic review of earlier frameworks but also because it is the only framework prepared primarily for the energy sector, though its elements can be easily adapted to other sectors as well. The article’s central argument is that while the NOGP 2017 represents an important step forward in the efforts to effectively regulate the oil and gas industry, there are significant gaps in the regulatory landscape proposed in the policy for the achievement of regulatory excellence. The article identifies those gaps and notes, however, that the achievement of regulatory excellence depends considerably on the implementation framework adopted by the new yet-to-be-established regulator when it comes into operation.
Notes
1 Jennifer Nash and Daniel E Walters, ‘Public Engagement and Transparency in Regulation: A Field Guide to Regulatory Excellence’ (Research paper prepared for the Penn Program on Regulation’s Best-in-Class Regulator Initiative, 2015) 1 www.law.upenn.edu/live/files/4709-nashwalters-ppr-researchpaper062015.pdf accessed 20 November 2018.
2 Central Intelligence Agency, The World Factbook 2017 www.cia.gov/library/publications/the-world-factbook/rankorder/2244rank.html accessed 19 November 2018.
3 Ibid.
4 Chilenye Nwapi, ‘A Legislative Proposal for Public Participation in Oil and Gas Decision-Making in Nigeria’ (2010) 54 Journal of African Law 184, 184.
5 Ibid.
6 United Nations Development Programme, Niger Delta Human Development Report (2006) 17 http://hdr.undp.org/sites/default/files/nigeria_hdr_report.pdf accessed 19 February 2019.
7 Nwapi, ‘A Legislative Proposal’ (n 4) 185.
8 Ministry of Petroleum Resources, ‘National Gas Policy: Nigerian Government Policy and Actions’ (2017) www.petroleumindustrybill.com/wp-content/uploads/2017/06/National-Gas-Policy-Approved-By-FEC-in-June-2017.pdf accessed 28 July 2019 [Ministry of Petroleum Resources, NGP].
9 Ministry of Petroleum Resources, ‘National Petroleum Policy: Nigerian Government Policy and Actions’ (2017) www.petroleumindustrybill.com/wp-content/uploads/2017/07/National-Petroleum-Policy-Approved-by-FEC-in-July-2017.pdf accessed 19 December 2017 [Ministry of Petroleum Resources, NPP].
10 Nigeria Petroleum Industry Governance Bill 2018 www.petroleumindustrybill.com/wp-content/uploads/2018/04/Harmonised-Clean-Copy-of-Petroleum-Industry-and-Governance-Bill-2018.pdf accessed 20 February 2019 [PIGB].
11 Cary Coglianese, ‘Listening, Learning, Leading: A Framework for Regulatory Excellence’ (Penn Program on Regulation, University of Pennsylvania 2015) www.aer.ca/documents/about-us/UPenn_Final_Report_Regulatory_Excellence.pdf accessed 20 June 2018; Adam M Finkel, ‘Beyond Best-in-Class: Three Secrets to Regulatory Excellence’ in Cary Coglianese (ed), Achieving Regulatory Excellence (The Brookings Institution 2017) 166–87.
12 Coglianese, ‘Listening’ (n 11) ii.
13 Ibid iii.
14 See Theodore Okonkwo and Uzuazo Etemire, ‘“Oil Injustice” in Nigeria’s Niger Delta Region: A Call for Responsive Governance’ (2017) 8 Journal of Environmental Protection 42, 43.
15 Petroleum Act, 1969, s 8.
16 See House of Representatives, Federal Republic of Nigeria, Ad-hoc Committee on the Activities of the Department of Petroleum (DPR), Nigerian National Petroleum Corporation (NNPC) and its subsidiaries, Order Paper No 159, 4th Republic, 3rd National Assembly, 2nd Session, 26 March 2009, p 544 www.nassnig.org/document/download/2632 accessed 1 December 2018; Abiodun Fagbemi, Seye Olumide and Bertram Nwannekanma, ‘Lawyers Divided over Buhari’s Plan to Head Petroleum Ministry’ (The Guardian, London, 8 October 2015) https://guardian.ng/news/lawyers-divided-over-buharis-plan-to-head-petroleum-ministry accessed 1 December 2018; James Kanyip, ‘Can the President of the Federal Republic of Nigeria Hold a Ministerial Portfolio?’ (2015) www.pressreader.com/nigeria/thisday/20151020/281900182057444? accessed 1 December 2018.
17 This is likely the combined effect of ss 5(1)(a), 130, 138, 147(1) and 148(1) of the Constitution.
18 National Oil Spill Detection and Response Agency (Establishment) Act, No 15 of 2006. While the Federal Ministry of Environment has overall responsibility for the protection of the environment, the oil and gas industry is regulated by environmental guidelines issued by the Department of Petroleum Resources (an arm of the Ministry of Petroleum Resources) for the conduct of oil and gas operations.
19 The Constitution is silent on which level of government has environmental regulatory power. While the federal government’s power to regulate oil and gas resources allows it to regulate matters incidental to oil and gas, which include the environmental impacts of oil and gas development, states have a legitimate interest in protecting their environments from the environmental impacts of oil and gas development. The dividing line between their responsibilities is not quite clear.
20 See Allan Ingelson and Chilenye Nwapi, ‘Environmental Impact Assessment Process for Oil, Gas and Mining Projects in Nigeria: A Critical Analysis’ (2014) 10(1) Law, Environment and Development Journal 35, 49 and 53.
21 G. Ugo Nwokeji, ‘The Nigerian National Petroleum Corporation and the Development of the Nigerian Oil and Gas Industry: History, Strategies and Current Directions’ (Paper prepared in conjunction with an energy study sponsored by the James A Baker III Institute for Public Policy and Japan Petroleum Energy Centre, Rice University, 2007) 2 www.bakerinstitute.org/media/files/page/9b067dc6/noc_nnpc_ugo.pdf accessed 25 November 2018.
22 Ibid.
23 Jesse Salah Ovadia, ‘Indigenization vs. Domiciliation: A Historical Approach to National Content in Nigeria’s Oil and Gas Industry’ in Toyin Falola and Jessica Achberger (eds), The Political Economy of Development and Underdevelopment in Africa (Routledge 2013) 47–73; Femi Asu, ‘Discretionary Allocations Stifling Oil Industry’s Growth – Ezekwesili’ (Punch, 17 April 2018) https://punchng.com/discretionary-allocations-stifling-oil-industrys-growth-ezekwesili accessed 3 May 2019.
24 Natural Resource Governance Institute, ‘Country Strategy Note – Nigeria’ (2016) 6 https://resourcegovernance.org/sites/default/files/documents/country-strategy-note-nigeria.pdf accessed 10 January 2019; Daniel Adugbo, ‘Oil Licensing: Clock Ticks on Nigeria as E/Guinea, Others Advance’ (2017) www.pressreader.com/nigeria/sunday-trust/20170709/282634622651145 accessed 18 December 2018.
25 House of Representatives, Federal Republic of Nigeria, Ad-hoc Committee on the Activities of the Department of Petroleum (DPR), Nigerian National Petroleum Corporation (NNPC) and its subsidiaries, Order Paper No 159, 4th Republic, 3rd National Assembly, 2nd Session, 2009 www.nassnig.org/document/download/2632 accessed 10 January 2019.
26 Wumi Iledare, ‘An Appraisal of Oil and Gas Industry Reform and Institutional Restructuring in Nigeria’ (2008) International Association of Energy Economics, Fourth Quarter, 23, 23 www.iaee.org/documents/newsletterarticles/408wumi.pdf accessed 19 January 2019.
27 Ibid.
28 Abiodun Edward Adelegan, ‘Oil and Gas Sector Law Reform and Its Implications for Economic Development in Nigeria’ (2017) 5(3) International Journal of Development and Economic Sustainability 24, 27.
29 Donna Obaseki-Ogunnaike, ‘Understanding the Nigerian Petroleum Industry Governance Bill 2016’ (2017) 15(1) Oil, Gas & Energy Law Intelligence (online) 1, 2.
30 Michael Howlett and Ishani Mukherjee, ‘Achieving Regulatory Excellence in the Agri-food Biotechnology Sector: Building Policy Capacity’ (2016) 18(1) Asian Biotechnology & Development Review 35, 35.
31 AER, ‘The Alberta Model for Regulatory Excellence’ (2016) 1 www.aer.ca/documents/about-us/RegulatoryExcellence_Model.PDF accessed 20 January 2019.
32 It recognised that the development landscape for Alberta’s energy resources ‘requires a world leading regulatory organization that has a best in class mind-set, attitude, capabilities and regulatory systems to deliver superior performance’. Coglianese, ‘Listening’ (n 11) 1.
33 At its establishment in mid-2013, the AER’s vision was to be ‘recognized as best-in-class, ensuring the safe, environmentally responsible development of energy resources for the benefit of all Albertans’. AER, ‘2013/14 Annual Report’ 21 http://aer.ca/documents/reports/201314_AERAnnualReport.pdf#page=23 accessed 20 January 2019.
34 AER, ‘The Alberta Model for Regulatory Excellence’ (n 31) 1.
35 Ibid.
36 Coglianese, ‘Listening’ (n 11).
37 Ibid 3.
38 Shelley H Metzenbaum and Gaurav Vasisht, ‘What Makes a Regulator Excellent? Mission, Funding, Information, and Judgment’ in Cary Coglianese (ed), Achieving Regulatory Excellence (The Brookings Institution 2017) 148–65.
39 Scott Hempling, Preside or Lead? The Attributes and Actions of Effective Regulators (2nd edn, National Regulatory Research Institute 2013) 1.
40 Coglianese, ‘Listening’ (n 11).
41 Ibid 23.
42 Ibid.
43 Ibid.
44 Ibid ii.
45 Ibid.
46 Ibid 23.
47 Ibid.
48 Ibid.
49 Ted Gayer, ‘Regulatory Equilibrium’ in Cary Coglianese (ed), Achieving Regulatory Excellence (The Brookings Institution 2017) 88, 97.
50 Cary Coglianese, ‘The Challenge of Regulatory Excellence’ in Cary Coglianese (ed), Achieving Regulatory Excellence (The Brookings Institution 2017) 1, 11.
51 Ibid 12.
52 Coglianese, ‘Listening’ (n 11) 27.
53 Ibid 30.
54 Ibid 31–33.
55 Ibid 34–35.
56 Ibid 35–37.
57 Ibid 69.
58 Ibid 56.
59 Ibid 57.
60 Ibid 4.
61 Ministry of Petroleum Resources, NGP (n 8) 14.
62 Ministry of Petroleum Resources, NPP (n 9) 15.
63 Ministry of Petroleum Resources, NGP (n 8) 14.
64 Ministry of Petroleum Resources, NPP (n 9) 16.
65 See Ministry of Petroleum Resources, ‘7 Big Wins – Short and Medium Term Priorities to Grow Nigeria’s Oil & Gas Industry 2015–2019’ (2016) www.buharimeter.ng/wp-content/uploads/2017/05/7-wins-.pdf accessed 19 December 2018.
66 Ministry of Petroleum Resources, NPP (n 9) 50.
67 Ibid 48.
68 Ibid 16.
69 Ibid 48.
70 Ibid 45.
71 PIGB (n 10) s 4.
72 Ibid s 6.
73 Ibid s 6.
74 Ibid s 2.
75 Ministry of Petroleum Resources, NPP (n 9) 52.
76 Ibid.
77 PIGB (n 10) s 6(5)(b).
78 See Ingelson and Nwapi (n 20) 54.
79 PIGB (n 10) s 5(e).
80 Ministry of Petroleum Resources, NPP (n 9) 84.
81 Ibid 84–85.
82 PIGB (n 10) s 6(1)(r).
83 Ministry of Petroleum Resources, NPP (n 9) 85.
84 Ibid.
85 PIGB (n 10) s 6(1)(s).
86 Elimma C Ezeani and Chinwe Nwuke, ‘Local Content and the Marginal Fields Programme: Challenges for Indigenous Participation in the Nigerian Oil Industry’ (2017) 15(1) Oil, Gas and Energy Law Intelligence 15 https://openair.rgu.ac.uk/bitstream/handle/10059/2225/EZEANI%202017%20Local%20content%20and%20the%20Marginal%20Fields.pdf?sequence=3&isAllowed=y accessed 3 May 2019. See, also, Dentons, ‘Marginal Fields in Nigeria: Recent Developments’ (2014) 1.
87 Ministry of Petroleum Resources, ‘Guidelines for Farmout and Operation of Marginal Fields, 2013’ http://africaoilgasreport.com/wp-content/uploads/2013/12/GUIDANCE-NOTES-FOR-NIGERIAN-2013-MARGINAL-FIELDS-BID-ROUND.pdf accessed 21 December 2018.
88 Ibid.
89 Ezeani and Nwuke (n 86) 14–15.
90 Dentons (n 86) 1.
91 Ministry of Petroleum Resources, NPP (n 9) 85.
92 Donato de Rosa and Nick Malyshev, ‘Regulatory Institutions: A Blueprint for the Russian Federation’ (2008) OECD Working Papers on Public Governance No 10, 5 www.oecd.org/regreform/regulatory-policy/42142925.pdf accessed 10 January 2019.
93 PIGB (n 10) s 4(1).
94 Ibid s 4(3).
95 Ibid s 14(2).
96 Ibid s 15.
97 Ibid s 22(a).
98 Ibid s 27(1).
99 Ibid s 12.
100 OECD, Governance of Regulators’ Practices: Accountability, Transparency and Coordination (OECD Publishing 2016) 57.
101 AER, ‘Alberta Energy Regulator – Mandate and Roles Document’ (2017) http://aer.ca/documents/about-us/Secretariat_MandateRoles.pdf accessed 20 January 2019.
102 Ministry of Petroleum Resources, NPP (n 9) 41.
103 Ibid 42.
104 Ibid 104.
105 Ibid 105.
106 See, eg, Ingelson and Nwapi (n 20).
107 PIGB (n 10) s 10.
108 Ibid s 8.
109 Ibid s 8(5).
110 See Howlett and Mukherjee (n 30).
111 Ibid 38.
112 Ibid 41.
113 Douglass C North, Institutions, Institutional Change and Economic Performance (Cambridge University Press 1990) 4.
114 Howlett and Mukherjee (n 30) 41.
115 Finkel (n 11) 178.
116 Ibid.
117 Ibid 182.
118 NI Ikpeze, CC Soludo and NN Elekwa, ‘Nigeria: The Political Economy of the Policy Process, Policy Choice and Implementation’ in Charles C Soludo, Osita Ogbu and Ha-Joon Chang (eds), The Politics of Trade and Industrial Policy in Africa: Forced Consensus? (Africa World Press 2004) 341, 342.
119 See Chilenye Nwapi, ‘Enhancing the Effectiveness of Transparency in Extractive Resource Governance: A Nigerian Case Study’ (2014) 7 Law and Development Review 23.
120 Ministry of Petroleum Resources, NPP (n 9) 53.
121 See Margaretha Scott, ‘Developing Effective Mineral Resource Policy for Sustainable Livelihoods through Geoscience’ (International Mining for Development Centre Action Report, 2013) https://im4dc.org/wp-content/uploads/2013/09/Scott-ZambiaGS-FR-Completed-Report.pdf accessed 11 December 2018.
122 See AER, Alberta Geological Survey Open Data Portal https://geology-ags-aer.opendata.arcgis.com accessed 20 January 2019.
123 Lynn S McCarty, Christopher J Borgert and Ellen M Mihaich, ‘Information Quality in Regulatory Decision Making: Peer Review Versus Good Laboratory Practice’ (2012) 120 Environmental Health Perspectives 927, 927; OECD, ‘General Questions and Answers Concerning OECD Principles of Good Laboratory Practice (GLP) and Mutual Acceptance of Data (MAD)’ (2015) www.oecd.org/env/ehs/testing/General-Questions-and-Answers-Concerning-OECD-Principles-of-GLP.pdf accessed 18 December 2018; Caroline Moermond and others, ‘Assessing the Reliability of Ecotoxicological Studies: An Overview of Current Needs and Approaches’ (2017) 13 Integrated Environmental Assessment and Management 640.
124 Neil Gunningham, ‘Compliance, Enforcement, and Regulatory Excellence’ in Cary Coglianese (ed), Achieving Regulatory Excellence (The Brookings Institution 2017) 188–206.
125 Robert A Kagan, Neil Gunningham and Dorothy Thornton, ‘Fear, Duty and Regulatory Compliance: Lessons from Three Research Projects’ in Christine Parker and Vibeke Lehmann Nielsen (ed), Explaining Compliance: Business Responses to Regulation (Edward Elgar Publishing 2011) 37, 41.
126 See Coglianese, ‘Listening’ (n 11); DC Esty, ‘Regulatory Excellence: Lessons from Theory and Practice’ in Cary Coglianese (ed), Achieving Regulatory Excellence (The Brookings Institution 2017) 133–47; Metzenbaum and Vasisht (n 38) 148–57.
127 Kathryn Harrison has argued that the assumption that regulatory decisions are ‘based on evidence or science alone’ is ‘a mistake’ and that values (including political values) play an important role too. Kathryn Harrison, ‘Regulatory Excellence and Democratic Accountability’ in Cary Coglianese (ed), Achieving Regulatory Excellence (The Brookings Institution 2017) 56, 62–63.
128 Bridget Hutter has considered the different types of risks that regulators deal with, viewing ‘excellent regulators … as excellent risk managers’. Bridget M Hutter, ‘A Risk Regulation Perspective on Regulatory Excellence’ in Cary Coglianese (ed), Achieving Regulatory Excellence (The Brookings Institution 2017) 101, 103. See also Cary Coglianese and Howard Kunreuther, ‘Insurance and the Excellent Regulator’ in Cary Coglianese (ed), Achieving Regulatory Excellence (The Brookings Institution 2017) 238–54.
129 Hutter (n 128) 104.
130 Robert Baldwin, ‘Regulatory Excellence and Lucidity’ in Cary Coglianese (ed), Achieving Regulatory Excellence (The Brookings Institution 2017) 115, 116.