The Nigerian Senate has finally passed the Petroleum Industry Governance Bill after 17 years of consideration. The bill which seeks to reform the oil and gas industry will unbundle the Nigerian National Petroleum Corporation (NNPC), the Department of Petroleum Resources (DPR), the Petroleum Products Pricing and Regulatory Agency (PPPRA) as well as other agencies, while creating two new independent entities namely the National Petroleum Assets Management Commission (NPAMC) and the National Petroleum Company (NPC).

Under this new structure, the NPAMC (now referred to as “the management company”) will have the responsibility for the management of assets held by NNPC under the Production Sharing Contract and the Back-in Rights Provisions. The NPC would operate as a profit-driven commercial entity, which will be run like a private company and will be responsible for management of all other assets.

The unbundling of NNPC may cause some concern to foreign partners and oil companies and questions may arise as to the legal consequence of previous agreements. The new Bill provides for the transfer of assets and liability, which would be “fully effective and enforceable against or in favour of the Management Company as if, instead of NNPC, the Management Company had been named herein”.

The lawmakers believe that the passage of the bill will open up the sector to better business opportunities, while ensuring transparency, accountability of revenue derived from oil and will help steer Nigeria out of recession.