THE NIGERIAN OUTLOOK ON THE RELEASE OF WORKERS IN THE OIL AND GAS INDUSTRY

Author: O. M. Atoyebi S.A.N FCIArb. (U.K.)., Contributor: Sogo Emmanuel

October 17, 2022
9:20 am

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Recent research has revealed that the Oil and Gas Industry is estimated to be $7425.02 billion in 2025 at a CAGR of 6%.[1] This implies that the Oil and Gas industry is very lucrative and governments of oil-producing nations are keen on sustaining it by ensuring that investors at all levels prioritize the welfare of domestic employees.

A very critical step that an oil-producing nation like Nigeria has taken is to ensure that domestic workers in her Oil and Gas Industry are not released on the volition of the International Oil Companies, without first seeking and obtaining the approval of the Minister of Petroleum, through the office of the Department of Petroleum Resources.

It is noteworthy that this supposed stance of the Nigerian Government does not exist in a vacuum, as the Department of Petroleum Resources issued a Guideline specifically for the Release of Staff in the Nigerian Oil and Gas Industry on October 17, 2019.

We shall now take a proper dive into the nitty-gritty of the said guideline and its impact on the Nigerian Oil and Gas industry since it came into force.

WHAT CONSTITUTES STAFF RELEASE?

What constitutes Staff release under the said guidelines is no different from the general meaning of staff release, as it simply means the outright termination of an employee’s contract for a reason. This has been expatiated in the Guidelines as follows:

“Staff Release means the removal of a Worker in a manner that permanently separates the said Worker from the Employer. Instances of staff release shall include the following: i. Dismissal ii. Retirement iii. Termination iv. Redundancy v. Release on medical grounds vi. Resignation vii. Death viii. Abandonment of Duty Post[2]”

PROCEDURE FOR STAFF RELEASE

Whilst it is true that the international oil companies in Nigeria should ordinarily release workers based on the employment agreement, this is not the case in Nigeria as the consent of the Minister of Petroleum is fundamental to the legality of such release. Where an oil company fails to obtain such ministerial consent, then the release thereto would be unlawful as the condition precedent was not followed to the latter.

For the sake of absurdity, we shall now highlight the particular provision of the guideline that provides for consent of the Minister of Petroleum as follows:

“Any Employer who wishes to release a Worker shall apply in writing to the Director for the Minister’s approval stating the manner of staff release, the reasons for the proposed release, the compensation due to the Worker, and any proposed replacement for the Worker. The application shall contain a copy of any document relevant to the Worker’s employment including the Employer’s Conditions of Service as defined under these Guidelines.[3]”

A cursory look at the above excerpt of the guidelines clearly reveals that it is not enough for an International Oil Company to request the approval of the Minister of Petroleum. Such a company must also state the reason, the compensation due to the worker, and the possible replacement of the said worker.

IMPLICATIONS FOR BREACH OF THE GUIDELINES

The implication for failing to comply with the said requirements when applying for the Minister’s approval is tantamount to a refusal of such application. This is stated in the guideline as follows:

“Where the Employer fails to submit any required information to the DPR, such application for staff release shall not be eligible for the Minister’s approval.”

Furthermore, where an International Oil Company breaches the guideline, it is liable to pay a fine for default. This is particularly stated in the guideline as thus:

“As provided in Regulation 60B of the Petroleum (Drilling and Production) (Amendment) Regulations 2019 any person who fails to comply with these Guidelines is liable to a penalty issued by the Director of Petroleum Resources not exceeding Two Hundred and Fifty Thousand United States Dollars (USD 250,000.00), and in addition, any permit, licence or lease granted to that person may be withdrawn or cancelled by the Director of Petroleum Resources.”

WHAT IS THE LEGALITY OF THE SAID GUIDELINES?

Since the Guideline came into force, it has sparked reactions from many quarters as lawyers and public commentators have had their say. While some proponents believe that the guideline is too stringent, as seeking the minister’s approval for the release of workers in the oil and gas industry appears to be draconian, and so will not survive the furnace of litigation.

Albeit, the said provision of the Guideline was judicially tested by the Court in a recent Suit between Shell Petroleum Development Company of Nigeria LTD v The Minister of Petroleum & 2 ORS.[4]

In this case, the Nigeria Upstream Petroleum Regulatory Commission which was formerly the Directorate of Petroleum Resources, that released the Guidelines for the release of workers in the oil and gas industry, had received a petition from a certain employee that was released by SPDC without the requisite consent of the minister. SPDC had responded to the petition by citing a precedent that cited the guideline to be in breach of standard employment contracts. DPR being dissatisfied with the response of SPDC issued a fine, and SPDC approached the Court to adjudicate on the issue.

The Court held that the previous decision relied on by SPDC has been overtaken by events since the enactment of the Petroleum Industry Act, as it empowers the Minister for Petroleum to make regulations and/or Guidelines that cover personal contracts of service. The Court, therefore, upheld the fine issued by DPR.

CONCLUSION

As far as the principle of precedent is concerned, the recent decision of the National Industrial Court is the position of the law. This means that an employer that releases its worker without the requisite consent of the petroleum minister will be fined, and such release is tantamount to a reversal.

Albeit, an argument can be maintained that the PIA cannot give life to a regulation that was already in force before its enactment.

[1] GLOBE NEWSWIRE, ‘The “Oil and Gas Global Market Report 2021: COVID-19 Impact and Recovery to 2030”<https://www.globenewswire.com/news-release/2021/03/04/2187025/0/en/Global-7425-02-Billion-Oil-and-Gas-Markets-2015-2020-2020-2025F-2030F.html>(2021) Last Accessed 23 September, 2022.

[2] Article 3.0 GUIDELINES FOR THE RELEASE OF STAFF IN THE NIGERIAN OIL AND GAS INDUSTRY 2019.

[3] Article 4.0 GUIDELINES FOR THE RELEASE OF STAFF IN THE NIGERIAN OIL AND GAS INDUSTRY 2019

[4] Suit No: NICN/ABJ/178/2022.

THE NIGERIAN OUTLOOK ON THE RELEASE OF WORKERS IN THE OIL AND GAS INDUSTRY

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