This research work titled “critical analysis of the regulatory regimes of the petroleum industry in Nigeria” is centred on the legal and institutional frameworks of the regulatory regimes of the petroleum industry in Nigeria. The work attempted to trace the development, growth and evolution of the regulatory regimes in the petroleum industry pre and post oil discovery in Nigeria and in the same vein traced the evolution of regulatory institution in the petroleum industry. The work also examined the legal frameworks of the petroleum industry and also analysed the roles of regulatory institutions of the petroleum industry in Nigeria. Doctrinal research methodology was adopted throughout the research period. In conclusion, the work identified the following problems as factors affecting the regulatory regime in the industry; obsolete legal framework in the industry, inadequate penalties for defaulting companies operating in the industry, excess executive powers granted to the minister by the petroleum Act, fusion of corporate governance in the industry, conflict of oversight functions among the regulators and non-juristic personality of the DPR. At the end, we recommended that a speedy passage of the Petroleum Industry Bill is necessary if the obsolete nature of the existing petroleum laws must be addressed. Reduction of excesses administrative powers of the Minister of Petroleum should also be addressed by way of legislative amendment of the existing Acts, Decentralization of corporate governance in the industry should be a priority to our law makers, provision and enforcement of stiffer sanction regime should be enthroned in the industry, clear definition of functions and upgrading of DPR’s corporate personality should also be addressed by the relevant authority.
1.1 Background to the Study
The Petroleum Industry is currently the largest industry in Nigeria and the major generator of Gross Domestic Product (GDP) in the country which accounts for 80% contribution to the Nigerian economy. Nigeria‟s budget in a fiscal year is largely sourced from the Petroleum Industry.1
Oil was discovered in Nigeria in 1956 at Oloibiri2 after half a century of exploration. The discovery was made by Shell-BP, who was at that time the sole concessionaire of oil exploration licence in Nigeria. Upon the said discovery, Nigeria joined the ranks of oil producers in 1958 when its first oil field came on stream producing approximately 5,100 barrel per day (bpd)3. After 1960, exploration rights in onshore and offshore areas adjoining the Niger Delta were extended to other foreign companies. In 1965 the exploration field was discovered by Shell in shallow waters of Warri.4 In 1970, which saw the end of the civil war coincided with the rise in the world oil price, and Nigeria was able to reap instant riches from its oil production.
Consequent upon discovery of crude oil in Nigeria, and the increasing growth in the petroleum activities in the industry, there was the need by Federal Government to enthrone a legal and institutional framework by way of a regulatory regime that will regulate the petroleum industry. The effect of this led to the enactments regulatory laws in the industry5 and regulatory institutions respectively in order to ensure transparency, accountability and effective service delivery in the industry for the benefits of all Nigerians.
However, Nigeria operates a command and control regulatory framework in the petroleum industry6. This type of regulation was prevalent in the United States and Britain during the 1970s and 1980s7. Under this type of regulatory framework, regulators are deemed to be acting in the public interest. This work focuses on the extant public regulatory regime petroleum industry in Nigeria. Generally, factors, such as red-tape, over-regulation and regulatory capture, amongst others, are some reasons militating against a command and control regulatory regime8. This work will therefore attempt to
examine the state-oriented or public regulatory framework in petroleum industry in Nigeria, and the fundamental ills afflicting the industry.