Updated Overview of the Petroleum Industry Act (PIA.pptx

PIA

1. Petroleum Industry Act (PIA)

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

3. Introduction

4. Introduction Definition : The Petroleum Industry Act (PIA) is a comprehensive legal framework designed to regulate the oil and gas industry, enhance efficiency, and transparency, and attract investment. It aims at transforming the Nigerian oil and gas sector, ensuring long-term sustainability, accountability, and profitability.

5. Introduction The PIA (PIB) was presented to the NA by the Obasanjo administration two decades ago to address and impose transparency and accountability in the petroleum sector. OPTS initially objected to the bill coupled with the 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 the Midstream and Downstream Regulatory Authority.

6. Objectives

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

8. Key objectives

9. Other Key Objectives of the PIA

10. Key Provisions in PIA

11. Key Provisions in PIA

12. 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 Regulatory Framework Nigerian Upstream Petroleum Regulatory Commission (NUPRC) : Oversees upstream operations. Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) : Regulates midstream and downstream sectors.

13. Fiscal Framework Host Community Development Trusts : Ensuring community participation and benefit. Production Sharing Contracts (PSCs) : Revamped to balance interests of government and investors. Royalty and Tax Regimes : Revised to be more competitive and equitable. KEY PROVISIONS IN PIA

14. Environmental Management Stricter environmental regulations and standards. Mandatory environmental remediation funds. KEY PROVISIONS IN PIA

15. Local Content Development Policies to promote indigenous participation. Capacity building and technology transfer initiatives. KEY PROVISIONS IN PIA

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

17. 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

18. 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

19. Fiscal Regimes

20. 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%

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

22. 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

23. Host Community/PIA

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

25. GOVERNANCE AND INSTITUTIONAL STRUCTURES

26. 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 the 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).

27. IMPACT OF PIA ON STAKEHOLDERS Government Enhanced revenue streams. Improved regulatory compliance and oversight. Investors Greater clarity and stability in fiscal and regulatory regimes. Increased investment opportunities and incentives. Host Communities Direct benefits from Host Community Development Trusts. Improved infrastructure and social amenities. Industry Operators Streamlined processes and reduced operational bottlenecks. Increased opportunities for local content and partnerships.

28. PIA CHALLENGES AND OPPORTUNITIES

29. PIA CHALLENGES AND OPPORTUNITIES

30. Conclusion

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

32. Conclusion The Petroleum Industry Act (PIA) is a landmark legislation aimed at overhauling Nigeria's oil and gas sector, fostering a more efficient, transparent, and attractive industry for stakeholders. Understanding and adapting to the PIA is crucial for all industry participants to leverage its full potential.

33. Thank you