Agbakoba advocates for new model for Nigerian oil sector

Senior Advocate of Nigeria, Dr Olisa Agbakoba, has asked the Federal Government to adopt the Petroleum Development Model instead of the current model known as the Petroleum Contract.

The renowned expert stated this at a press conference in Lagos on Wednesday.

According to Agbakoba, in the oil and gas development model, oil and gas are treated not only as a source of income but also as a tool for the development of the country.

In the document, “Rethinking Oil and Gas Governance in Nigeria”, he noted that the concept of oil development was in stark contrast to the traditional contract-based oil development approach that Nigeria had been implementing over the years.

He said the current model allows international oil companies to co-own joint ventures that extract oil, sell it and share the profits with the government.

He said the IOCs had too much control over operations, arguing that the Nigerian National Petroleum Company Limited did not play an active role in making key operational decisions.

The legal expert lamented the scale of capital flight in the oil industry through payments to foreign contractors and service providers, the use of foreign banks for transactions and the repatriation of profits to the IOC’s home countries.

Agbakoba asked the government to adopt an oil development model that emphasizes the active participation of the state and control over the management of oil resources.

He sought to develop local refining capacity, establish a petrochemical industry, and create processing industries using crude oil and gas as raw materials.

“Under this model, a larger share of oil revenues is retained domestically. These revenues are strategically reinvested in infrastructure development, education and healthcare, economic diversification, and energy-related research and development,” he said.

“Creation of a new development-focused governance framework, including a single, strong and independent regulator that will ensure transparency and efficiency; and a restructured national oil company focused on maximizing value for the country’s development, as in Saudi Arabia.

“To initiate a national debate on the optimal governance structure for the oil and gas industry, engaging stakeholders from government, industry, civil society and academia.”

Agbakoba was agitating for the repeal or amendment of the Petroleum Industry Act because it was in conflict with the Nigerian Constitution. Section 64(c) of the PIA is in conflict with Section 162(1) of the Nigerian Constitution.

“Elaborate new legislation that is consistent with the development approach to oil. The emphasis should be on using oil and gas resources for the development of the country,” he said.

Meanwhile, in an interview with The Punch, George Ene-Ita, spokesman for the Nigerian Petroleum Midstream and Downstream Regulatory Authority, disagreed with Agbakoba on the repeal of the PIA Act, which came into force just three years ago.

“I don’t know why SAN is demanding the repeal of a law that has not been implemented for three years,” he said.

A spokesman for the NMDPRA said there may be calls for a review of the act but not its complete repeal.

“SAN is an institution in the practice of law. He knows what he is talking about. I am just saying that this is the document we use to regulate the industry. And until we see another one, we will use it. It is still a working document and we will implement it as best we can,” Ene-Ita added.

Similarly, the spokesman of the Nigerian Petroleum Regulatory Commission, Olaide Shonola, told our correspondent that the PIA is the best thing that has happened to the oil industry in recent times.

According to Shonola, the Act has been helpful and much has been achieved thanks to it.

“For us, PIA is a plus. PIA should not be repealed because it is useful,” Shonola said.