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At the Petroleum Industry Bill (PIB) hearing which started in Tuesday, Nigerian National Petroleum Corporation (NNPC) has recommended the splitting of petroleum licences into two components for prospecting and production phases under the draft Petroleum Industry Administrative legislation currently before the National Assembly.
At the hearing organized by the House of Representatives Committee on the Petroleum Industry Administrative Bill (PIAB), Petroleum Industry Fiscal Bill (PIFB) and the Petroleum Industry Host Community Bill (PIHCB), Group Managing Director(GMD) of the corporation, Maikanti Baru, said the proposed split would prevent a situation where operators would sit perpetually on oil acreages.
The GMD said the proposed split which NNPC’s recommendation under the PIAB seeks a break up of Petroleum Licence into Petroleum Exploration Licence (PEL) – to prospect for petroleum, while the second component to be known as Petroleum Lease (PL), should be created to cover the production phase to search for, win, work, carry way and dispose of petroleum.
According to the latest monthly operations and financial reports of the NNPC for January 2018, released in Abuja, the total oil production in one year, from January to December 2017 was 690,011,529 million barrels (mb), out of which PSCs contributed 305,811,278mb (44.31 per cent).
BusunessDay investigation into the state owned organization indicated that 1.5 billion liters of the Premium Motor Spirit (PMS), consumed in the country in 2017 were refined locally as NNPC imported 12.97 billion liters of the product into the country in 2017, representing 90% of the product distributed by the corporation.
In a statement by NNPC’s spokesman, Ndu Ughamadu said the corporation also pushed for a re-think of the duration of licences as proposed in the PIAB which stipulates initial duration of 25 years for onshore and shallow water petroleum licence and 30 years for deep water and frontier acreages.
NNPC, however, proposed five years prospecting licence for onshore and shallow fields and a duration of 10 years for deep offshore and frontier basins.
It recommended 20 years production lease for onshore and shallow fields as well as deep offshore and frontier basins. The corporation noted that only the production lease period should be renewed for a period not exceeding 20 years.
On the PIFB version of the proposed oil industry law, NNPC recommended a three-stage licences regime consisting of: Exploration Licence (EL) – to explore for petroleum on a non-exclusive basis; Petroleum Exploration Licence (PEL) – to prospect for petroleum on exclusive basis; and Petroleum Lease (PL) – to search for, win, work, carry away and dispose of petroleum.
Beyond the clause by clause recommendations, the corporation also advocated for the simplification of the fiscal system for ease of implementation and to ensure progress.
It called for expunging all regulatory issues out of the draft legislation to empower the Commission to regulate the industry effectively.
NNPC highlighted the need to introduce and provide clauses that will ensure easy review of provisions of the bill in response to economic, technical and other considerations, while disallowing legislation on issues bordering on contracts.
Chairman of the House Committee, Honorable Alhassan Ado Doguwas, thanked the NNPC for its contribution, noting that the committee would sift through all the submissions by stakeholders before taken informed decisions on the issues.
Stakeholders who converged at the ongoing public hearing on petroleum industry administration, fiscal and host community bills, including Executives of international and indigenous oil companies have expressed concerns over the loss of investments worth $250 billion due to absence of supportive legislation for the oil and gas industry reform.
Speaker of the House Yakubu Dogara said yesterday at the public hearing on Petroleum Industry Reform Bills at the National Assembly in Abuja that government knows the industry could no longer meet its aspirations and those of key stakeholders.
Some of the participants who made presentations include: chief executives of Chevron, ExxonMobil, Shell, Oil and gas workers unions, traditional leaders from the oil producing region, civil society organizations (CSOs), among others, applauded the ingenuity of the 8th Assembly on the reforms of the oil and gas industry.
Power struggling, nepotism and politicking by successive governments have delayed passage of the full PIB until it was split in parts to allow the less contentious aspects to be dealt with gradually, however after the recent successful passage of the Petroleum Industry Governance Bill (PIGB) by the senate awaiting assent from president which is the first part of the Petroleum Industry Bill (PIB).
The expectation from stakeholders is that the bill would be given accelerated consideration and immediate implementation for maximum utilisation of the nation’s hydrocarbon resources.
