…PENGASSAN warns regulatory uncertainty threatens investment, jobs

Industry experts in the oil and gas sector blame regulatory uncertainty, inadequate infrastructure, and weak execution for the widening gap between the country’s resources and the value derived from them.

Firing the first salvo, the Managing Director of Nigeria LNG Limited, Adeleye Falade, who spoke at the fifth PENGASSAN Energy and Labour Summit in Abuja yesterday, said Nigeria has an estimated 600 Trillion Cubic Feet (TCF) of gas potential but continues to struggle with gas-to-value and conversion issues.

Falade said more than 37 per cent of Nigerians lacked access to electricity as of 2024, even as substantial volumes of associated gas continued to be flared, and gas-based industries struggled to secure reliable supplies.

He said the central challenge was no longer whether Nigeria possessed sufficient gas resources, but whether the country could build the governance structures, infrastructure, commercial frameworks and human capacity required to convert those resources into economic value.

“Geology creates opportunity; governance determines the outcome,” Falade said.

According to him, Nigeria’s gas resources could provide electricity for households, feedstock for industries, jobs for citizens, foreign exchange for the economy and wider prosperity, but resource abundance alone could not deliver those outcomes.

The NLNG chief executive said Nigeria was both a major LNG exporter and a country struggling to provide dependable electricity and gas supplies to domestic industries.

He described the situation as the ‘Nigerian gas paradox’ of a country rich in gas but yet to fully translate its reserves into economic value.

Falade said the gap between resource ownership and economic prosperity was determined by governance, investment and execution.

His argument dovetailed with concerns raised by PENGASSAN President, Festus Osifo, who warned that regulatory uncertainty could discourage investment and delay projects required to raise Nigeria’s oil and gas production.

Osifo said investors needed clear, predictable rules; operators needed certainty; workers needed protection; host communities needed confidence; and the government needed sustainable revenues.

He argued that Nigeria’s regulatory framework must therefore be predictable, transparent, efficient and fair.

According to him, changes to the regulatory architecture after the enactment of the Petroleum Industry Act (PIA) 2021, including moving some fiscal provisions to the Nigeria Revenue Act and using an executive order to amend provisions of the petroleum law, could create uncertainty for investors.

He also raised concerns over overlapping responsibilities among regulatory institutions, warning that repetitive approvals, multiple inspections and conflicting directives could impose avoidable costs and delays on operators.

Osifo said the answer was not deregulation or weak enforcement but “smarter regulations” that understood commercial realities, embraced technology and eliminated unnecessary duplication.

Falade similarly stressed the link between regulatory certainty and investment, arguing that investors would commit capital only where they had confidence that rules were clear, fiscal terms competitive, contracts respected and regulatory processes transparent and predictable.

He explained that predictability reduced risk, lower risk reduced the cost of capital and lower capital costs made projects more commercially viable.

“The more viable projects we have, the more infrastructure we can create. We can create jobs, generate revenue and, ultimately, add greater value to the national economy,” he said.

Falade said Nigeria had made significant progress in building its gas policy and regulatory architecture, citing the National Gas Policy of 2017, the Decade of Gas Initiative launched in 2021, and the PIA enacted the same year.

However, he stressed that policy and legislation had to translate into commercially viable projects and infrastructure.

Nigeria, he noted, possesses gas resources capable of supporting power generation, fertiliser production, petrochemicals, LPG, manufacturing and other industrial activities.

Yet the country continues to face inadequate electricity generation and distribution, while gas-based industries struggle to obtain dependable feedstock.

The consequence, he suggested, was an economy sitting on significant energy resources without fully capturing their potential multiplier effects.

Falade used NLNG’s experience to show what long-term governance, stable commercial arrangements, and stakeholder alignment can achieve.

Since commencing operations in 1999, NLNG has grown into a six-train facility with capacity to produce 22 million metric tonnes per annum of LNG and five million metric tonnes of NGL.

He said the company had loaded more than 6,000 LNG cargoes over more than 25 years of operation, built an asset base valued at over $22.9 billion, generated more than $149.6 billion in revenue, paid over $7.2 billion in dividends and contributed more than $10.8 billion in taxes.

Falade said the figures represented more than corporate performance, arguing that they translated into foreign exchange, taxes, jobs, infrastructure and economic opportunities for Nigeria.

The implication, he said, was that stable governance and long-term commercial relationships could transform natural resources into sustained economic value.

NNPC Limited Group Chief Executive Officer, Bashir Bayo Ojulari, brought the regulatory debate back to the workforce, saying the effectiveness of any regulatory framework ultimately depended on the people who implemented it.

He said a regulatory framework, however well written, could only be as strong as the people who applied it.

Ojulari said NNPC was therefore focused on creating a human-centred organisation where employees felt valued, heard and fairly treated.

He argued that regulatory discipline should be based on facts, sound governance and clear rules. At the same time, employees should be encouraged to challenge waste, indiscipline and reckless conduct that threatened the company’s stability and growth.

Osifo warned that the drive to attract investment and increase production must not erode workers’ rights.

He demanded protection of jobs, pensions and collective bargaining rights in acquisitions and divestments, arguing that changes in ownership of petroleum assets should not automatically translate into the loss of established workers’ rights.

He also called for stricter enforcement of local content in employment, particularly in engaging expatriates.

According to him, foreign expertise should be used where genuine skills gaps existed, but expatriate employment should not become a means of replacing qualified Nigerians.

He called for expatriate approvals to be tied to measurable knowledge transfer, succession plans and the development of Nigerian capacity.

The speakers were unanimous that for gas in particular, the challenge extends beyond reserves. They argued that it encompasses investment, pipeline and processing infrastructure, power generation, domestic gas pricing, regulation, commercial certainty and the ability of institutions to execute policies consistently.

As Falade put it, the country’s geological advantage creates the opportunity; institutions, the regulatory framework, the investment climate, and the capacity to execute will determine whether that opportunity becomes electricity, industrial production, jobs, revenue, and broader prosperity.