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Key Elements of The 2017 National Petroleum Policy

      • Streamlining of policies and full legal separation of operations across the value chain
        The NPP also provides for a robust institutional framework for ensuring smooth and seamless operations along the petroleum industry value chain. First, the NPP proposes the establishment of the Commission as a single regulator for the whole petroleum sector (thereby replacing all existing regulatory entities) in order to address challenges of information gaps among multifarious regulatory entities, over-regulation, regulatory overlaps and lacunae. Specific regulatory issues proposed to be within the Commission’s remit include: (i) upstream oil and gas licensing (ii) midstream licensing and economic regulation (iii) downstream petroleum products licensing and regulation (iv) downstream gas licensing and regulation (v) health and safety compliance (vi) environmental compliance (vii) consumer protection (viii) metering and measurement (ix) cost monitoring & control (x) inspection, investigation and compliance monitoring, and (ix) developing technical standards working with industry stakeholders. Although the Commission is proposed to exist independently of the MPR, its operations are expected to be in line with the MPR’s policy directions.

        Also, it is expected that clear and distinct regimes for different operations across the value chain will be promoted, such that there is full legal separation between the upstream, midstream and downstream segments of the petroleum industry.


      • Full legal separation of infrastructure ownership and operations, and trading 
        The NPP proposes a commercial framework for opening up access to pipelines and networks as well as setting pricing principles and regulations for the petroleum industry.

        First, this initiative is to ensure that the different activities of infrastructure ownership, operations, and trading in the petroleum industry are carried out by separate companies. Whilst asset owners in one segment of the value chain may own and operate assets in different segments of the value chain if they wish to do, they will only be able to do this via separate corporate vehicles. In other words, a group of companies may comprise of a holding company having interests in different legal entities operating in the upstream, midstream and downstream segments.

        Second, the initiative promotes the introduction of a suitable and effective network code to govern open access to all pipelines and other essential midstream infrastructure, located either offshore or onshore.

        Third, the initiative will promote the adoption of “cost-of-service approach” in the sector, using average, standard or benchmark costs. Essentially, a regulated tariff regime will be introduced for the monopoly infrastructure areas of the industry, in a manner that will provide investors the opportunity to recover all eligible costs with reasonable return on investment.