A Review of the Nigerian Energy Industry

PIB, a serious environmental protection proposal?

Cover of the PIB27 August 2013, Lagos – “Although adequate containment measures were put in place to combat the Bonga oil spill, it however posed a serious environmental threat to the offshore environments,” said Peter Idabor, Director General of Nigeria Oil Spill Detection and Response Agency, NOSDRA, during a legislative hearing on the Bonga oil spill.

“The people could not fish after a long period after the spill,” he later told the BBC’s Focus on Africa program. “So that’s why we are looking at the damages. If the people said they will not pay, so be it. But we want to make it very clear that it’s wrong for them to say they cannot pay. Are they denying that they spilled 40,000 barrels of crude oil into the waters?”

Environmental degradation, including oil spill and gas flaring, has accompanied the entire history of oil and gas exploitation and development in the Niger Delta. It is noteworthy that Nigeria has been referred to by many as the “Oil pollution capital of the world,” little or no effective solution has emanated from our laws and regulations.

Forget international support and the compendium of current environmental laws and regulation on the books for a moment. The issue being raised by environmentalists, academics as well as energy and environmental attorneys, and stakeholders in the industry is, if the proposed PIB will address the tragic environmental devastation in the Niger Delta? That is, if the bill will ensure the following:
•Adequate requirements for prevention of, preparedness for, and response to oil discharges.
•Plans and established procedures, methods, and equipment requirements.
•Gas flaring prevention.
•Compliance with internationally recognized standards of “good oil field practice.”

The draft PIB reflects the most exhaustive review of the legal and regulative framework for the oil and gas industry in Nigeria since the inception of commercial operations, and could provide a crucial opportunity to ensure that the socio – economic impacts of the oil industry are adequately addressed.

The PIB dealt extensively on environmental protection issues ranging from “Environmental Quality Management”, gas flaring, financial contributions for remediation and abandonment, decommissioning and disposal, pipeline safety, health, and the environment in general terms. For example Section 198, subsection (1) states that in the course of upstream operations, no person shall injure or destroy a tree which is of commercial value, or the object of veneration to the people resident in the area of the lease or license. If they do so (2), they are required to pay fair compensation to those directly affected. Unlike previous legislations, the PIB is more specific as to acts, victims and compensatory damages.

Furthermore, section 200 of the bill made provision for the establishment of an Environmental Management Plan (EMP), which must include the operator’s environmental policy, objectives and targets and contain a commitment to comply with relevant laws, regulations, guidelines and standards. The EMP establishes a baseline information program concerning affected areas to determine protection and remedial measures and environmental management objectives. Also, to investigate, assess and evaluate the impact of the proposed exploration and production activities on the environment and persons who might be directly affected by the upstream petroleum operations.

While gas flaring has been illegal in Nigeria since 1984, the problem of curtailment and remediation remains a problem due to governmental exemptions of oil companies, and inconsequential fines for flaring. The PIB which is much more specific as to gas flaring, in an attempt to address the mirage of problems associated with gas flaring, provides for a prohibition of gas flaring.

The bill also mandates an ongoing gas flaring penalty and establishes procedures, methods, and equipment requirements in this regard. The Minister who is the chief regulatory officer of the industry is mandated to set a date when all natural gas flaring will stop, unless granted a permit to continue to do so.

On the issues of remediation of environmental damages the bill put to rest the problem of financial contribution by a lease of license holder of an affected area. Section 203 provides for the establishment of an Environmental Remediation Fund as a condition precedent to the approval of Environmental Management Plan of a lessee or licensee by the Inspectorate – the regulatory agency in charge of the sector.

The fund will be established by the Inspectorate with guidelines as to rehabilitation or management of negative environmental impacts with respect to the license or lease. Also, the bill requires the Inspectorate to determine the amount of financial contribution, relating it to the size of the operations and the level of environmental risk, that level of risk being determined by the Inspectorate.

– Felix Ayanruoh, Vanguard

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