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Redefining DPR’s role in Nigeria’s oil, gas sector

SINCE Year 2000, Nigeria has struggled with instituting a new law that will guide oil and gas operations in the country but without much success. In 2008, the Petroleum Industry Bill, PIB, was presented to the National Assembly, but still yet to become a law.

The PIB is conceived as an omnibus bill that will repeal the Petroleum Act of 1969, as well as consolidate about 16 other petroleum industry laws into one single, transparent and coherent document.

According to the Federal Government, the objective is to establish a comprehensive legal and regulatory framework for good governance, transparency and accountability with regard to operational and fiscal terms for revenues management, and removal of confidentiality clauses in licences, leases and contracts in the nation’s petroleum industry.

In doing these, the bill seeks to streamline the functions of the industry regulatory agencies being performed by the Department of Petroleum Resources, DPR; the Nigerian National Petroleum Corporation, NNPC; and the Petroleum Products Pricing Regulatory Agency, PPPRA, with a view to eliminating overlaps for effective operations monitoring.

Analysts believe this separation of powers among regulators is particularly important to remove bureaucratic bottlenecks that impede rapid development in the oil and gas sector.

Among the regulators, the DPR stands out as the arrowhead, with regard to regulating and monitoring oil and gas activities in Nigeria, in order to ensure standards, compliance and best international industry practices.

This is with a view to conserving the nation’s hydrocarbon resources and maximising returns on investments to government, especially as the petroleum industry accounts for more than 90 percent of the nation’s foreign exchange earnings through crude oil exports and over 80 percent of its total annual income.

Even though it is one of the most restructured agency of government, and while the debate, to-be-or-not-to-be, rages at the National Assembly, DPR, has performed its functions to the extent that operators and the general public alike are in no doubt, about who is in charge of what in the petroleum industry from the downstream to the upstream sectors.

As proposed by the petroleum bill, some of the functions of the DPR will be shared among the various regulators along the lines of sub-sectors, while it retains most of the technical functions.

This notwithstanding, the DPR, among others, currently serves as the repository for archiving and retrieval of all oil and gas data in Nigeria.

Advises government on the nation’s authentic oil and gas reserves, production and export for planning and development purposes.

> Ensures that oil and gas operations in Nigeria have linkages with the host communities and meet local content aspirations of government.

> Ensures that oil and gas activities are carried out in a safe and environmentally sustainable manner.
> Manages and administers Nigeria’s oil and gas acreage and concessions; and

> Follows development in global Health, Safety and Environment, HSE standards and adapts these to domestic circumstances.

Furthermore, the agency introduced the open, electronic and competitive licensing round, while also launching a major initiative to deliver gas as a separate business from oil.

It has also completed a comprehensive review of the fiscal terms applicable to oil and gas exploration and production and applied these to Production Sharing Contracts, PSCs, which paid off with additional 780,000 bopd new oil from deep offshore region since 2003. It also also undertook a successful drive for the Marginal Fields programme.

Although it could not give details, but the DPR said it had consistently surpassed its revenue targets in terms of royalties and other revenues for government.

In the downstream sector, it said it had increased petroleum products storage capacity from 1.4 million metric tonnes, MT, to 3.75 million MT and corresponding distribution network by 270 percent from 2005 to date. It supervised the successful completion of the engineering and fabrication of components for the first private refinery soon to be installed.

It also said it had reduced gas flare to 20 percent, while generating a comprehensive gas map flare points as well as successful audit of oil and gas reserves; and successfully introduced compressed natural gas, CNG, as an automotive fuel.

In addition, it has established National Data Repository, NDR, which provides a digital platform for DPR regulatory activities and the National Production Monitoring System, NPMS, which provides the platform for transmission of production & export data by companies to DPR and for the generation of certificate of quantity at terminals and FPSO during crude loading.

With 21 branch offices for effective monitoring of oil and gas facilities nationwide, the agency has metamorphosed over the years, taking up and shedding responsibilities to reflect its status at each point in time.

As far back as the early 1950’s, the DPR was established and named the Hydrocarbon Section of the Ministry of Lagos Affairs, and reported to the then Governor-General and was later upgraded to a Petroleum Division within the then Ministry of Mines & Power.

In 1970, the Division was renamed the Department of Petroleum Resources, but retained its statutory supervisory role in the industry, when the Nigerian National Oil Corporation, NNOC, was created to engage in commercial activities in 1971.

By 1975, it was constituted into the Ministry of Petroleum Resources, but excised from energy matters, and became the Petroleum Inspectorate Department in 1977, when the ministry and the NNOC were merged to form the NNPC.

Again by 1985, a new Ministry of Petroleum Resources was recreated, while the Inspectorate remained within the NNPC structure and retained its regulatory functions. But upon the commercialisation of the NNPC in 1988, the Petroleum Inspectorate was excised from the Corporation due to the non-commercial nature of its functions, and merged with the ministry to constitute its technical arm


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