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Tag: petroleum

  • Petroleum tax

    Petroleum tax

    • Fashola is right in insisting that this belongs to the states

    The day was Tuesday, February 19. The venue was the Nigerian Institute of International Affairs (NIIA), Victoria Island, Lagos. The occasion was the 80th birthday anniversary of foremost legal luminary, prominent Lagosian, statesman and Federal Commissioner of Works and Housing in the General Yakubu Gowon regime, Alhaji Femi Okunnu.

    It was certainly a most apposite opportunity for the Governor of Lagos State, Mr.Babatunde Raji Fashola (SAN), who delivered a public lecture at the event, to reflect on critical issues affecting the practice of federalism in the country, and the place of Lagos in the Nigerian federation. In his lecture titled “The essence of patriot and federalist”, Governor Fashola gave notice of his administration’s determination to resist any plan by the Federal Government to tax the purchase of petrol at pump price as provided for in the Federal Road Maintenance Agency (FERMA) Act.

    Describing the collection of any such levy by the Federal Government as unconstitutional, the governor argued, and rightly so, that the proposed levy is a consumption tax, which ought to be collected by the state within which the commodity is consumed. Governor Fashola buttressed his argument by pointing out that Lagos State has 592 state roads, 8,402 local government roads and 25 federal roads, with the state having to bear the burden of the attendant heavy vehicular tonnage on this vast road network.

    Surely, his argument that any petroleum tax at pump price must be rightly collected by the state to maintain the roads is unimpeachable. We fully identify with the governor’s strong denunciation of the country’s defective fiscal federalism when he declared that “The Federal Government is already collecting royalties on extraction of crude oil, taxing the profits of oil companies at about 30 per cent, taking 52.68 percent of the national revenues and leaving 36 states and 774 local governments with 26.72 per cent and 20.60 per cent, respectively. We will not lie at ease and watch a further encroachment”.

    This skewed fiscal arrangement in favour of the centre is one reason why most states are unviable and rely substantially on monthly allocation from the centre. Yet, the states and local governments are where the vast majority of Nigerians who must be provided with infrastructure, jobs and social services live. The implication of the current situation is that the entire country is virtually dependent on oil revenues of the Niger Delta to the detriment of that region. This is because the Federal Government monopolises most sources of revenue, including solid minerals with which many states are richly blessed and from which they should benefit.

    It is noteworthy, as Governor Fashola said, that Lagos State is currently in court over the Value Added Tax (VAT), another consumption tax that is centrally collected rather than left to each state in accordance with the principles of derivation and federalism. According to the governor: “The same applies to the attempt to encroach on the power of states to raise revenues in their territories from lotteries, hotel licensing and other areas of residual authority of the state … Beyond the registration of hotel as a company from which the Federal Government has collected revenues through the Corporate Affairs Commission, what more service does it render to hotels in the various states of the federation?”

    As the country’s most populous state as well as commercial and industrial nerve-centre, Lagos contributes substantial revenues to the national treasury but gets only a pittance in return to meet its obligations. But the struggle to remedy this warped fiscal structure cannot be left to Lagos alone. All states will benefit from a more just fiscal arrangement, which will also help curb the current obscene profligacy at the centre.

  • Falcon Petroleum eyes gas distribution in Ghana

    •To manufacture equipment

    Falcon Petroleum Limited, which has the franchise to distribute natural gas to industries and bulk energy users in Ikorodu, Lagos, has concluded arrangement to extend distribution of the product to Ghana.

    The Managing Director of the company, Prof. Joseph Ezigbo, made this known at an event for women of Ikorodu Phase II pipeline host communities.

    He said: “We are not only hoping to invest in Nigeria, we are also looking at Ghana. At the moment, we are working with our partners in Ghana to supply gas in the West African country. We are interested in building a gasification plant in Ghana to supply gas to industries in that country.

    “Though Ghana is already getting gas from Nigeria through the West Africa Gas Pipeline Company (WAPCo), this is not enough for Ghana at the moment.”

    On the other plans of the company, Ezigbo said: “Falcon Petroleum has grown substantially. We are consolidating on pumping gas to industries. We are also increasing our capacity. At the moment, the company is building a 12-inch gas pipeline. This will increase the gas supply as well as gas coming into our system. This will also increase the ability of our customers to be connected to our gas supply grid as required.

    “We have also gone into assembly and manufacturing of equipment, which is used in the country’s oil and gas sector. We have entered into a partnership with a company in India to operate a company in Nigeria to fabricate gas stations. We believe that when the Petroleum Industry Bill (PIB) is passed, there will be industrial explosion in the country. That means the industrial development will escalate.

    “We hope to complete the first phase by March this year. We are also trying to expand to other areas of the country because whether we believe it or not, industries depend on gas and the industrial revolution will not just be within the western region, but all over the country.”

    Commenting on the company, Ezigbo said: “As the first phase of the Ikorodu gas distribution phase project continues to witness an upsurge in the gas requirements of customers, and coupled with new industrial off-takers and prospects positioned along the Lagoon expansion axis, Falcon Petroleum Limited has initiated a capacity upgrade on its existing City Gate metering and regulating facility.

    “The capacity upgrade is necessary to enable the company to meet its immediate, medium and long-term supply obligations to its ever growing customer base. The new 25 million standard cubic feet per day (mmscf/d) capacity City Gate station will ensure a hitch-free gas delivery to all our customers in accordance to the requirements. The enhanced station will also ensure availability of excess capacity to meet any future supply nominations that may be required over the next few years.”

    He said the Ikorodu community has provided friendly environment for the company’s operations.

    “In Ikorodu, the people are so civilised and are very appreciative as well. This vocational training being sponsored by Falcon Petroleum is a way of saying thank you to the people of Ikorodu.

    “We will not stop here. We will send them for industrial attachment and will have monitoring team to monitor them, after which a starter-pack will be provided for them. They will be given a certain amount of money and equipment to start their businesses and we monitor them for one year to ensure that the system goes on as planned.

    “At the end of the training, we will select another group. It is a progressive thing because at the end of the day, the company would have empowered them to face the future positively.”

    Falcon Petroleum supplies gas to industrial giants such as Mayor Engineering, Spintex Mills, African Steel Mills, Sunflag Steel, Lucky Fibres and Energy Company of Nigeria – an independent power plant,, among others.

     

  • Petroleum Bill: Northern Senators rebuff FG overtures

    Petroleum Bill: Northern Senators rebuff FG overtures

    • Legislators: We fear backdoor hiking of derivation

     

    The Federal Government has launched an elaborate move to woo northern Senators and members of the House of Representatives opposed to the Petroleum Industry Bill (PIB).

    The northern members of the National Assembly and their governors however remained adamant in their opposition to the bill which they claim is skewed in favour of the oil producing states.

    Their fear stems largely from the possibility that the bill may be used to jack up the statutory 13.5 per cent derivation for oil producing states to between 45 and 50 per cent.

    They are bent on throwing out the provision for Host Community Fund which stipulates 10 per cent of the profit of oil companies for oil producing states and communities.

    The northern lawmakers have the backing of the International Oil Companies (IOCs) who may pull out of new investments in the country on account of the bill.

    Investigation by our correspondent showed that about three lobbying groups raised by the Ministry of Petroleum Resources and other oil-related parastatals have been reaching out to Senators and Representatives from the north.

    It was gathered that the selling points of the group are that the bill would ensure more transparency in the oil sector; Nigerians can own equity in the new National Oil Company and the National Gas Company; mass employment; the nation would earn more revenue; and the management of the oil sector will have enhanced indigenous outlook than the present dominance by foreigners.

    But northern Senators and Representatives have not bought the arguments of the lobbyists.

    A high-ranking Senator, who spoke in confidence, said: “The PIB is a booby-trap for the north. We have all resolved to oppose the passage of the bill into law and we are at a comfortable advantage because we have the majority in the two chambers.

    “Our main grouse borders on the establishment of Host Community Fund which we want removed from the bill because that will indirectly shoot up the derivation from 13.5 per cent to 45 to 50 per cent for oil producing states. We have commissioned a study and done our calculations.

    “Going by what is computed in the PIB, oil states and communities will enjoy about 29.5 per cent derivation. But we know that there are other inherent advantages which cumulatively could lead to 45 to 50 per cent derivation for oil producing states.

    “What has assisted us is that we have the backing of our colleagues from the South-West and some from the South-East. When Cocoa, groundnuts, palm oil and other commodity products were fetching revenue for the nation, nobody spoke of Host Community Fund.”

    Another Senator said: “What is painful is that the present 13.5 per cent derivation being enjoyed by oil producing states was put in place by past northern Heads of State and Governments. So, no one can accuse the North of ganging up against South-South or oil states’ interest.

    “What we want is a united Nigeria where all the Federating units will have equal stake. The padding of the PIB to guarantee more revenue for oil states should not have been when a South-South leader is in charge and when another South-South citizen is manning the Ministry of Petroleum Resources.

    Another ranking Senator said: “I told the lobbyists that the bill will set bad precedent because it appears it is politically motivated than economic reasons.

    “That is the way some of us from the north see it. We have not been convinced at all. That was why the Presiding Officer at the Wednesday session was tactical in managing the situation.”

    A principal officer in the House of Representatives said: “We have referred the PIB to a committee but the truth is that those of us from the north would like the recommendation for Host Community Fund expunged because the derivation policy is there to protect their interest.

    “If in future we see the need to increase the derivation percentage, we will do so without any backdoor approach.

    “We have listened to some of the lobbyists but we will put the nation first and ensure justice.”

    Another high-ranking member of the House said: “The engagement of a consultant has opened the eyes of Northern leaders, Northern Governors’ Forum, Senators and House members to the dangers in the PIB for the North.

    “We are ready to sit down with the Executive, make our claims and find alternatives to our grievances.”

    Another House member said: “Do you expect us to pass a bill which will leave the determination of royalties payable by oil companies to the discretion of the Minister f Petroleum Resources? We are sliding into a situation whereby a Minister will be more powerful than the President and Commander-In-Chief of the Armed Forces.

    “We will rather opt for a functional system than pass a bill that will cause chaos in future.”

    The northern governors, Senators and House members had rejected the PIB for containing some provisions which will short change the region.

    The grouse of the north are contained in a document prepared for the Northern Governors Forum, Northern Senators Forum and Northern Caucus in the House of Representatives.

    The document indicated that the PIB’s provisions could “lock the people of the region out” of ownership of oil and gas resources.

    The document reads in part: “On top of the 13.5 per cent statutory derivation from the Federation Account, the mandatory Federal budgetary allocation to the Ministry of Niger Delta, the Niger Delta Development Commission (NDDC) levy of 3% of oil operations and the massive amount of Federal funds being spent on the Niger Delta Amnesty programme, the new PIB is adding 10% of the profit of al Oil and Gas companies to the Niger Delta States and Communities.

    “Currently, without this new addition, four states (Akwa Ibom, Bayelsa, Delta and Rivers) earn more than the 19 northern states combined. One wonders what kind of federation we would end up with if this situation is escalated by the new PIB. In any case, what really is the constitutional standing of this particular provision in the Bill?

    “These and many more other issues are in the Petroleum Industry Bill need very close scrutiny by the Northern Governors Forum. Without this exercise, it is very possible for the states in the region to be legally short-changed through the process of legislation despite having the majority membership in the two chambers of the National Assembly.”

    On plans to divest equity in the proposed new National Oil Company and the National Gas Company, the northern leaders said there is no provision for safety net to protect the interest of the region.”

    They said the PIB ought to protect the north’s right to invest in these two companies because of its low participation in the Nigerian Stock Exchange.

    The document said: “The plan to divest equity in the new National Oil Company and the National Gas Company is not in itself an issue, the problem is to implement this provision of the law without any safeguards for equity and national spread.

    “The communities and businesses in the northern states are not very active players on the Nigerian Stock Exchange. In this regard, simply off loading the equity of these national assets on the stock market could lock the people of the region out of ownership of these critical resources.

    “The region must therefore insist on legislating guarantees for equity and national spread on whatever divestment plans there are for oil and gas assets.”

    As at press time, it was learnt that the IOCs are uncomfortable with the PIB.

    A highly-placed source said: “Some of the IOCs have concluded plans to divest from our oil sector if the bill is passed in its present form.”

  • Jonathan to receive three reports on petroleum industry

    Jonathan to receive three reports on petroleum industry

    The two committees set up by the Federal Government earlier this year on different aspects of the country’s petroleum industry will present their reports to President Goodluck Jonathan on Friday.

    This is contained in a statement issued on Monday in Abuja by the Special Adviser to the President on Media and Publicity, Dr. Reuben Abati.

    One of the committees, according to Abati, is that led by Mr. Dotun Sulaiman, charged with designing a new corporate governance code for ensuring full transparency, good governance and global best practices in the Nigerian National Petroleum Corporation and other oil industry parastatal agencies.

    He said the other headed by Dr. Kalu Idika Kalu was charged with conducting a high-level assessment of the nation’s refineries and recommending ways of improving their efficiency and commercial viability.

    Abati had said in a statement issued earlier that Jonathan had directed that a comprehensive report of the Petroleum Revenue Special Task Force chaired by Malam Nuhu Ribadu should be presented to him on Friday.

    He said the directive was in furtherance of the administration’s commitment to transparency, probity, and accountability in the petroleum sector.

    The News Agency of Nigeria reports that the Ribadu-let Committee was set up in February to, among other tasks, determine and verify all petroleum upstream and downstream revenues (taxes and royalties, etc,) due and payable to the Federal Government.

    It was also charged with taking all necessary steps to collect all debts due and owed, and to obtain agreements and enforce payment terms by oil industry operators.

    Abati said the president would receive the reports of the Sulaiman, and Kalu-led committees at the Presidential Villa immediately after the presentation of the report of the Ribadu-led Petroleum Revenue Special Task Force.

     

  • Petroleum Minister’s family house submerged

    Petroleum Minister’s family house submerged

    •Ex-CDS Gen. Ogomudia’s, Otobo’s homes too

    THE houses of Chief Porbeni, grandfather of the Minister of Petroleum Resources, Mrs. Deziani Alison-Madueke and father of former Transport Minister Admiral Festus Porbeni, the late Chief James Otobo, a former deputy Premier of the defunct Western Region, are among thousands of houses submerged by flood in Delta State.

    Our reporter who visited communities in Burutu, Patani, Isoko North and South and Ndokwa East local government areas on Sunday, reports that no fewer than 200 buildings are submerged in Abari and Uzere communities in the two council areas.

    The minister’s 38-year-old one-storey family mansion in Abari, on the fringe of River Niger, has been converted to a ‘refugee centre’ by nearly 100 beleaguered residents of the community and others around the Niger and Asse rivers.

    Displaced persons fear imminent hunger and starvation.

    Eighty-two-year old Elder Frank Akpeti, whose bungalow was submerged to the roof, lamented: “This is the worst flooding in the history of our people. In my 82 years of existence, I have never seen anything close to this kind of flood; houses are being washed away, all our lifetimes of labours and savings have been swept away in a twinkle of an eye.”

    Speaking in the same vein, his son, Lawrence Apeti, who braced the rampaging flood to embark on a rescue mission to the village, said the case of his people was more pathetic as they had in the past contended with devastating erosion that had gradually eroded the community’s shoreline over the years.

    He said: “Look over there (pointing at a storey building painted in yellow colour), that is the home of the maternal grandfather of the Minister of Petroleum Resource (Mrs. Madueke), it was built in 1984. We have so many prominent men and woman from here, yet our people are suffering this untold hardship.

    “Government is not doing enough to make impact. Asking the people to evacuate is not enough, the various tiers of government should have assisted them. Fishermen who could barely feed their families are now using their hard earned money to evacuate themselves and at the end of the day huge sums of money would be allocated to this.”

    The member representing Delta State in the Niger Delta Development Commission (NDDC), Mr. Solomon Ogba, was just rounding off his tour of the flooded area at the Uzere-Abari road, which had become a running stream when our reporter visited the community.

    At Uzere, the country homes of Gen Alexander Ogomudia, a former Chief of Defence Staff (CDS) and those of Chief Otobo, were also submerged.

     

  • Eland Oil raises N29.5b to buy Nigeria’s OML 40

    Scottish firm, Eland Oil and Gas has successfully raised N29.5 billion (118 million pounds) to buy some shares in Oil Mining Lease (OML) 40 in Nigeria. This was after being listed in the Alternative Investment Market (AIM ) in London, three years after the company was founded.

    OML 40 covers some 500 square kilometres and is located onshore in the Niger Delta and contains light ‘sweet’ oil. Since 1964, 18 wells have been drilled there, with 15 finding hydrocarbons. One field, Opuama, was formerly in production for over 30 years, from 1975 to 2006.

    Eland plans to target production from existing wells at Opuama that will be restarted at an expected initial gross rate of at least 2,500 barrels of oil per day (bopd) in the next six months.

    By late 2013, the company also plans to explore two wells. Within four years, it hopes to reach gross production of 50,000 bopd. The company also seeks to acquire and develop under-exploited upstream assets in Nigeria.

    “OML 40 is an asset with production and exploration potential and with independently certified gross recoverable 2P Reserves of 71.5 million barrels, 3P Reserves of 117 million barrels in the Opuama and Gbetiokun Fields and Mean Contingent Resources of a further 16.7 million barrels in the Abiala and Ugbo Fields,” an official of the company said.

    Expressing his gratitude to the company’s shareholders, Les Blair, CEO of Eland Oil & Gas, said: “I am extremely grateful to the shareholders of the company who have supported us to complete this milestone transaction. The fundraising of £118 million is the largest on an AIM IPO for over three years and highlights the exciting prospects for OML 40 and Nigeria as a whole.”

    The 45 per cent stake acquired by Eland and Starcrest Nigeria Energy Limited in OML 40 was previously held by Royal Dutch Shell, Total and Eni-Agip. Shell owned 30 per cent stake in the joint venture for OML 40 while Total Exploration and Production held 10 per cent and Agip Oil held five per cent and the Nigerian National Petroleum Corporation (NNPC) held 55 per cent.
    The Federal Government and the Nigerian National Petroleum Corporation, NNPC granted all relevant approvals for the sale of the 45 per cent interest to the buyers.
    Shell JV sold the 45 per cent interest in OML 40 to Elcrest Exploration and Production Nigeria (EEPN) for $102 million. EEPN is a consortium of Starcrest Nigeria Energy and Eland Oil and Gas.

    With the purchase, Eland will own an initial 20.25 percent, with 24.75 percent held by its Nigerian joint venture partner, Starcrest. The remaining 55 percent is held by the Nigerian government through NNPC subsidiary – National Petroleum Development Company.

    Commenting on the sale, Shell Nigeria Country Chairman Mutiu Sunmonu said the divestment is part of the company’s strategy to refocus its asset portfolio. “SPDC is positioned well for investment and growth opportunities in all areas, including domestic gas, which will be delivered with the support of our government, partners and the people of Nigeria,” he added.

  • Oando’s rig marks three years of uninterrupted operation

    Oando Energy Services Limited (OESL), a subsidiary of Oando Plc, said its swamp drilling rig has recorded a safety milestone of three years of continuous operations without a Lost Time Injury (LTI) on its flagship rig, OES Integrity, last month.

    The achievement, the Head, Corporate Communications, Meka Olowola said, reflects Oando’ s commitment to health, safety, and environment (HSE) values, and affirms the company’s determination to remain a leading service provider in Nigeria’s oil and gas industry. LTI is an industry key performance indicator (KPI), which measures adherence to safety and environmental requirements by evaluating the number of injury-bearing incidents capable of preventing a worker from performing or continuing with a task or resulting in downtime in operations.

    OES Integrity rig was contracted to a leading international oil company in December 2009 and has successfully drilled, completed and worked over more than 14 wells, without any show-stopping incident. With a 3,000 hp modern swamp barge equipped with 15,000 psi Blowout Preventers (BOP), OES Integrity is the only rig in Nigeria capable of drilling in high pressure/high temperature (HPHT) wells to depths of 30,000 feet.

    Commenting, Mr Badejo Bandele, Chief Executive Officer, OESL said: “We are pleased with this feat achieved on the strength of our zero tolerance policy for stopping incidents in all our operations. The OES Integrity team has demonstrated their competence in world-class drilling operations and sound HSE values. We are committed to delivering consistent value to our clients’ drilling operations to the highest safety standards.”

    Chief Environment, Health, Safety Security and Quality (EHSSQ) Officer, Oando PLC Mr Chijoke Akwukwuma, said: “The health and safety of our employees are of the utmost importance to us. We strive to always be a bastion in oil and gas operations in terms of safety and environmental-friendliness, and we ensure our employees are always well-versed in the Oando culture of uncompromised safety and environment protection. We are committed to deploying best practice that meets global standards across our operations in conformity with world-class aspirations.”

    Oando has embraced vibrant policies and procedures covering product quality, safety, environment, health, security and emergency readiness to ensure that all its operations meet international safety requirements, guided by its “14 life-saving rules.” The company according to the statement, has a robust and strong environment, health and safety framework for employees that include training, regulatory certifications and a “stop work” policy which empowers employees to halt an operation on the account of unsafe work conditions. In addition, it hosts an annual safety week to deepen awareness and strengthen an incidence-free work life culture.

    OESL have three major offerings, which include drilling and completion fluids services, drill bits and engineering services, and drilling rigs.
    The company has five swamp rigs – OES Teamwork, OES Respect, OES Integrity, OES Passion and OES Professionalism – making it the largest swamp rigs fleet operator in Nigeria.

  • New Petroleum Industry Bill – An analysis

    The draft revised version of the Petroleum Industry Bill has finally been presented to the National Assembly and will hopefully be passed into Law without the necessity of any further amendments.

    The process was started in 2007 by the government of former President Olusegun Obasanjo on a realization that there was an urgent need to completely overhaul the oil and gas industry given the wanton ineptitude and gross inefficiency inherent in the system and especially in the operations of the Nigerian National Petroleum Corporation (NNPC), which rendered it incapable of meeting the aspirations for which it was set up.

    It is pertinent to note that the NNPC’s broad objectives included amongst others; participating in all stages and areas of the upstream and downstream energy sector; participating on behalf of the Federal Government in petroleum activities; performing regulatory functions; engaging in activities to enhance the petroleum industry with an overall mission to drive Nigeria’s economic and technical advancement, leveraging the country’s valuable petroleum resources.

    The NNPC became a hydra headed monster, performing the roles of regulator, operator, buyer and seller of oil and petroleum products and also a service provider. The consequence is an oil and gas industry that is bogged down by excessive government interference, bureaucracy, non-market pricing regimes, gross corruption and poor management.

    The former President Obasanjo set up the Oil and Gas Reform Implementation Committee (OGIC) to make viable proposals on how to overhaul the system with a view to making NNPC more efficient in its operations as a commercial entity. The findings of that committee were not implemented to the letter.

    The administration of former President Musa Yar’Adua continued this process by setting up the Lukman panel to address the plethora of issues that plagued the industry and importantly to define the legal regulatory and institutional framework that will govern activities in the industry especially the operations of the NNPC with a directive to maximise Nigeria’s interest. The report formed the basis of the first Petroleum Industry Bill of 2008.

    On coming to power, President Goodluck Jonathan followed the footsteps of president Yar’Adua to drive the reforms in the sector and create an industry that will usher Nigeria as one of the most industrialized countries in the world by the year 2020. The policy objective is to create an industry whose operations are transparent, highly efficient, corrupt free, competitive and in conformity with international best practice. There is also a policy goal to maximise Nigeria’s interest from the exploitation of its hydro carbon resource.

    The draft PIB repeals all existing laws and regulations governing the industry and is a comprehensive law governing all aspects of the oil and gas industry enshrining the principles of transparency, efficiency, competition and above all national interest.

    The first part of the Act deals with objectives which are stated as follows:
    •Create a conducive business environment for petroleum operations;
    Issues:
    This objective captures the need to create an enabling environment for investors and investments in the country. It is pertinent to point out that this will only be actualized when the current security challenge in the country is effectively contained.

    • Enhance exploration and exploitation of petroleum resources in Nigeria for the benefit of the Nigerian people;
    Issues:
    This objective makes the exploitation of the hydro carbon resource for the benefit of the Nigerian people a cardinal principle given the fact that the Nigerian people have not derived any significant benefit from oil operations since commercial discovery in 1950. It is hoped that the structures and institutions put in place in the new law will drive this objective.

    •Optimise domestic gas supplies particularly for power generation and industrial development;
    Issues:
    This is in line with government’s interventionist approach to stimulate gas supply obligation to ensure that there is supply to meet growing domestic demand projected to grow to 2 billion cubic feet per day of gas by the end of 2011.

    •Establish a progressive fiscal framework that encourages further investment in the petroleum industry whilst optimising revenues accruing to the Government;
    Issues:
    This seeks to strike a balance between investor and host government interest, given their diametrically opposing interests. For the investor, a fiscal regime that guarantees rewards commensurate with risks is vitally important while the host government seeks to maximize its revenues from oil and gas operations.

    •Establish commercially oriented and profit driven oil and gas entities;
    Issues:

    This is in line with the full commercialisation of NNPC to operate as a limited liability company with a profit driven mandate which will lead to good governance and high efficiency
    • Deregulate and liberalise the downstream petroleum sector;

    Issues:

    This is a welcome development to rid the downstream sector of government interference, stem fraud and corruption and introduce competition. It is hoped that government will demonstrate the political will to completely remove subsidy.
    •Create efficient and effective regulatory agencies;

    Issues:

    The bane of the industry includes gross inefficiency, weak regulatory institutions, endemic corruption and overall poor management. A new face of the industry with high efficiency and effectiveness of its regulatory institutions is certainly welcome. It is hoped that the institutions created under the Act will deliver on this objective.
    •Promote transparency and openness in the administration of the petroleum resources of Nigeria;
    Issues:

    This objective if implemented will institutionalize international best practice and boost investor confidence.
    • Promote the development of Nigerian Content in the petroleum industry
    Issues:

    As I stated in my recent analysis of the Nigerian Content Act, the PIB is a superstructure upon which the Nigerian Content Act is based. The PIB and LC Act are therefore mutually inclusive and coterminous. The PIB in supporting the Act confers the same benefits as the NC Act and provides for those categories of contracts which now fall within the domain of Nigerian indigenous companies and also for the training and participation of Nigerians in all aspects of the oil and gas industry.
    • Protect health, safety and environment in the course of petroleum operations;
    Issues:

    The protection of health, safety and the environment has become a central focus of oil and gas operations globally and continues to be on the front burner. There is provision for the early remediation of health, safety and environmental problems and an obligation on all operators to develop environmental management plans as well as pay compensation for damage to the environment.A very welcome development that will check environmental degradation especially in the Niger Delta.

    •Attain such other objectives to promote a viable and sustainable petroleum industry in Nigeria.

    Part 11 of the Act establishes key institutions.

    • Petroleum Technical Bureau – Section 9.
    This is a special unit in the office of the Minister and shall consist of professionals with expertise in the upstream and downstream sectors of the petroleum industry. It replaces the former Frontier Exploration Services of NNPC. Functions include: to provide technical and professional support to the minister on matters relating to the petroleum industry amongst others.

    • Upstream Petroleum Inspectorate – Section 13.
    This replaces the former DPR, with the objectives to promote the efficient safe effective and sustainable infrastructural development of the upstream sector of the petroleum industry amongst others.

    Its functions include: to administer and enforce policies, laws and regulations relating to all aspects of upstream petroleum operations which are assigned to it under any law. It is also to enforce compliance with the terms and conditions of all leases, licences, permits in respect of upstream petroleum operations amongst others.

    Issues:
    This function clearly overlaps with the functions of the Nigerian Content Development and Monitoring Board and may result in conflict in carrying out their duties. It is hoped that the two institutions will work harmoniously.
    • Downstream Petroleum Regulatory Agency – Section 43
    It takes over the functions of the Petroleum Pricing and Regulatory Agency and the Directorate of Petroleum Resources. Its main function is to administer and enforce policies, laws and regulations relating to all aspects of downstream petroleum operations as may be assigned it by law.

    • Petroleum Technology Development Fund – Section 73.
    S. 76 states that the purpose of the fund shall be for training Nigerians to qualify as graduates, professionals, technicians and craftsmen in the fields of engineering, geology, science and other related fields in the petroleum industry and in particular and without prejudice to the generality of the foregoing, the funds shall be utilized inter – alia to (a) provide scholarships and bursaries, wholly or partially in universities, institutions and in petroleum undertakings in Nigeria or abroad.
    Issues:

    Note that this law is saved in the new Act. Its key function is to apply the Development Funds for development of petroleum technology, capacities and capabilities or the training and education of Nigerians in the petroleum industry.

    It is hoped that there will be a transparent, equitable and just system that ensures access of qualified Nigerians to the Fund. Equally, it is expected that the Funds will drive Research and Development and capacity building in the industry and Nigeria as a whole thereby serving as a catalyst for Nigeria’s technological and economic development. The Nigerian Content Development and Monitoring Board must of necessity work closely with the Fund to ensure maximum success.

    •Ms Obua, a solicitor with over 20 years experience, is from the University of Dundee. She practices in the UK and also a partner at EN&N Legal Practitioners Victoria Island Lagos and can be reached at efuru@ennlawfirm.com/ eobua@hotmail.com