The future of the oil and gas industries has proven to be highly reliant on the crucial element of Research and development. Research and development programs develop new technologies, goods, and processes that help preserve the ecosystem, guarantee public health and safety, and impact all facets of the business, from oil and gas extraction to the distribution and sale of the end product.
The rights and ownership of oil and gas reserves in Nigeria are primarily governed by the 1999 Constitution of the Federal Republic of Nigeria (as amended) hereinafter referred to as (The Constitution). The Constitution vests ownership of all petroleum resources within Nigeria, its territorial waters, continental shelf, and exclusive economic zone in the Federal Republic of Nigeria’s government. Nigeria, Africa’s largest oil and gas producer, produces around 2 million barrels per day1. It also held the largest gas reserves on the continent and was the fifth-largest exporter of liquefied natural gas. Despite some obvious concerns, the entry of oil companies into the Niger Delta has undoubtedly brought significant financial impact.
Research and development (R&D) refer to any activity (study, investigation, analysis) aimed at solving a technological issue, contributing to a body of knowledge, resulting in a technical improvement, or resulting in an invention of new technology and oriented toward the advancement of Nigerian content in the oil and gas sector.
Firstly, The Nigerian Oil And Gas Research and Development Regulation (The Regulation) was enacted on the 26th day of February 2021 and developed by and under the supervision of the Nigerian Content Development and Supervision Board and issued by the Nigerian Minister of Petroleum (MOSP) for clarity and to provide practical strategies for consistent implementation and adoption of Nigerian content.
The ministerial regulations by The Nigerian Content Development and Monitoring Board (NCDMB) offer a structure for observing the application of the minimal requirements for training in the oil and gas sector. The Regulation also covers the registration of operators and other professionals with Nigerian professional organizations, the transfer of technology, and the creation of activities in Nigeria. Furthermore, in an effort to lay a foundation for Research and development as essential requirements with which operators, service providers, and entities involved in any project, operation, activity, or transaction in the industry must comply, the Regulations propose a framework and requirements that aim to assist in addressing such challenges.
All operations or transactions carried out in or related to the Nigerian oil and gas industry are subject to the provisions of the Regulation, which usually applies to all issues relating to Nigerian content. In addition, the legislation mandates that the Minister establish regulations with benchmarks and requirements for the expansion of Research and Development in the Nigerian oil and gas sector.
All operations or transactions carried out in or related to the Nigerian oil and gas industry are subject to the provisions of the Regulation, which usually applies to all issues relating to Nigerian content. In addition, the legislation mandates that the Minister establish regulations with benchmarks and requirements for the expansion of Research and Development in the Nigerian oil and gas sector.
OBJECTIVES OF THE REGULATION.
a) To establish standards for the expansion of Research and development in the Nigerian oil and gas industry;
b) To encourage the use of Nigerian facilities and cerebral resources in searching for research answers to industry issues in the Nigerian oil and gas sector.
c) To make provisions for financing research and development operations.
d) To make provisions for surveillance, supervision, and coordination of Research and development in the oil and gas industry.
EXCERPTS FROM THE REGULATIONS:
- By the Regulation, all operators and firms in Nigeria’s oil and gas sector are required to employ only Nigerians in their junior and intermediate cadres, as well as in any other comparable grades that they may name. Therefore, Nigerian independent operators shall be given first consideration in the award of oil blocks, oil field licenses, oil lifting licenses, and in all projects for which contract is to be awarded in the Nigerian oil and gas industry subject to the fulfillment of such conditions as may be specified by the Minister2.
- The board shall supervise, coordinate, administer, and monitor operators to ensure compliance with their research and development obligations under the act, these regulations, and any guidelines issued thereto by the board.3
- Research and Development Plans must include detailed descriptions of revolving 3(three) to 5(five) year plans for oil and gas Research and Development projects proposed to be undertaken in Nigeria, as well as the purpose and expected outcome of such initiatives, the nature and objectives of the Research & Development projects proposed to be implemented under the Plan, the research scope, and the planned expenditure4.
- An operator is obliged to present a written progress report on its research and development efforts to the board on the first working day of each quarter5.
- An operator shall notify the board of any publication In print, broadcast, or social media on Research in the oil and gas industry in Nigeria6.
- The NCDMB must evaluate and approve the Research and Development Plan and, in so doing, must consider the specific needs and knowledge gaps indicated by the operator. The NCDMB has the discretion to withhold its approval of any Research and Development Plan submitted by an operator where the plan contains inaccurate information regarding the nature and objectives of the Research to be carried out or where the operator has outstanding obligations to the NCDMB from a prior Research and Development undertaking. Where the NCDMB does not approve an operator’s Research and Development Plan, the operator must submit a revised plan and perform any outstanding obligations within 14 days of receiving the NCDMB’s notification7.
- Without prejudice to the NCDMB’s right for the Board to fund Research and Development activities in accordance with the Nigerian Content Development Fund Regulations, Operators must fund Research and Development activities to the satisfaction of the NCDMB after it has taken into account the Operator’s individual project and the funding needs of such project8.
- In relation to its work program and actions, an operator shall conduct a program and make expenditures for the advancement of education, affiliations, training, Research, and development in Nigeria, as specified in the Ministerial Regulations on Training issued under the Nigerian Oil and Gas Development act (NOGICDA). Such programs and expenses must be approved by the NCDMB9.
- If a deviation from the Research and Development Plan is not corrected by an operator within 14 days of notice by the NCDMB, the NCDMB may direct the plan’s execution of the plan to be halted. Upon notice, the operator must halt all activities related to the plan. The operator must send a written report to the NCDMB within 14 days of the suspension indicating the cause for the departure and its impact or otherwise on the Research and Development plan. When the NCDMB is pleased with the operator’s report or correction of the deviation, it may rescind the suspended order11.
- In accordance with the Ministerial Regulations on Training established under the NOGICDA, an operator must carry out a program and utilize the money to support education, employment, training, Research, and development in Nigeria. Programs and expenses of this nature need to meet the requirements of NCDMB12.
In conclusion, The Oil and Gas industry is the mainstay of the Nigerian economy and contributes significantly to Nigeria’s economic development. The Regulation under discussion in this article has made substantial provisions to catalyze the development of indigenous technology in the oil and gas sector. Thus, The Nigerian Content Development and Monitoring Board, (NCDMB) is accelerating the Research and Development framework to drive innovation in the country through the oil and gas sector. Regulations like this and more are highly relevant. It is hoped that there would be a smooth implementation of the regulations so that the regulations can yield the expected dividends to the Nigerian oil and gas industry.
REFERENCES
Oil & Gas Laws and Regulations Report 2023 Nigeria (iclg.com)
Section 35 of The Nigerian Oil and Gas Industry Content Development Act,2010
Regulation 5 of the Nigerian Oil and Gas Research and Development Regulation 2021
Schedule; 1(a-e) of the Nigerian Oil and Gas Research and Development Regulation 2021
Regulation 21 of the Nigerian Oil And Gas Research And Development Regulation 2021
Regulation 33 of the Nigerian Oil and Gas Research and Development Regulation 2021
Regulations 14,15, and 16 of the Nigerian Oil and Gas Research and Development Regulation 2021
Regulation 31 of the Nigerian Oil and Gas Research and Development Regulation 2021
Regulation 23 of the Nigerian Oil and Gas Research and Development Regulation 2021
Regulation 19 of the Nigerian Oil and Gas Research and Development Regulation 2021
Regulation 30 of the Nigerian Oil And Gas Research And Development Regulation 2021
Written by Kate Nkume for The Trusted Advisors
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