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Tag: PIB

  • Alison-Madueke, Nebo, others for PIB confab Thursday

    The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, Minister of Power, Prof. Chinedu Nebo, lawmakers, top officials and regulators in the oil and gas industry will converge on Lagos on Thursday to chart course for the passage of the Petroleum Industry Bill (PIB) and other issues.

    The event, which is the yearly August conference of the National Association of Energy Correspondents (NAEC), has as theme: “PIB: Harmonisation and implementation for economy growth,” will hold on Thursday, August 22 at Eko Hotel and Suites, Victoria Island, Lagos by 9am.

    In a in a statement, the Secretary of the association, Yunus Yusuf, said Alison-Madueke will be the special guest of honour while the Group Managing Director, Nigerian National Petroleum Corporation (NNPC) will deliver the keynote address.

    The Minster of Power, Prof. Chinedu Nebo will speak on “Driving capacity growth in liberalised power sector,” while the PIB Team lead, Ministry of Petroleum, Abiye Membere, will deliver the lead paper.

    The Director, Department of Petroleum Resources (DPR), George Osahon, will speak on “Expectations and challenges of effective regulation in deregulated regime,” and the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Ernest Nwapa, will talk on “Three years of NCDMB: Achievements and challenges.”

  • Why IoCs are against PIB, by expert

    Why IoCs are against PIB, by expert

    •Allays fear over falling demand for Nigerian oil

    THE Executive Director, A-Z Petroleum Products Kenya Limited, Prof Charles Ofoegbu, yesterday noted that the International Oil Companies (IOCs) are fighting the passage of the Petroleum Industry Bill (PIB) into law because of local content.

    He stressed that the foreign players are kicking against the bill because of their concerns on local content.

    Ofoegbu, a geophysist and the former Director General, Building and Road Research Institute (NBRRI), also attributed the dwindling demand for Nigerian barite to cash calls as against quality.

    He said: “As far as they are concerned, we must not encourage the mining of barite in Nigeria.

    “No local content should be in our petroleum industry. That is why they are fighting even the PIB.”On local content, he said that creating the Nigerian Content Monitoring and Development Board is different from getting the board to regulate the industry.According to him: “The board is one thing and another thing is to get the board to control the industry.

    “There are so many boards in this country and so many decrees and so many acts. One thing is even to enforce it.

    ”You first create an enabling environment to ensure that if it is material need, that material is locally available.

    “If it is human resources need, you must provide a base that you don’t need to depend on anybody.”Ofoegbu submitted that government must inject funds into the industry for local players to assert their authority.

    He, however, said that the major challenge in the upstream oil sub-sector is funding, since oil is a capital intensive business with a high risk.Ofoegbu stressed the needs for banks to support indigenous oil firms.

    He dismissed fears over a declining demand for Nigeria’s crude oil, saying there can never be a substitute to oil.

    Reacting to the United States energy policy to stop oil import for a substitute commodity, Ofoegbu said: “Let me be frank with you, there will never be a substitute to oil because of the technology.

    “It can never be a substitute to the present oil that is being used now. It will only accommodate some minor components of the domestic needs.”

     

  • Oil workers protest exclusion from PIB public hearing

    Members of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and National Union of Petroleum and Natural Gas Workers (NUPENG) have protested their exclusion from the National Assembly’s public hearing on the Petroleum Industry Bill (PIB).

    They alleged that critical stakeholders in the oil and gas industry were denied the opportunity of making their presentations at the hearing.

    The action of the National Assembly Joint Committee was deliberate and not in the interest of the nation. They said the committee ended the hearing, without allowing the invited stakeholders to make their presentations.

    In a position paper sent to The Nation, the PENGASSAN’s President, Mr Babatunde Ogun, said 14 out of the 54 memoranda given to the National Assembly was presented during the hearing.

    Ogun listed the memoranda to include expunging the provision granting the President powers to use his discretion to award petroleum licences and leases from PIB; ensuring that the bill provides transparency on the award of contracts and licensces, and other accompanying processes.

    Others are ensuring that the bill builds on the efforts of National Extractive Industries Transparency Initiative (NEITI) by erasing the ’black hole’ perception of the oil and gas industry; mandatory publication of all licences, tenders, and contracts; voiding confidentiality clauses for oil revenue and payment information; publication of statistical figures of oil operations that include but not limited to production export and import on quarterly basis; annual reports and audits of operations and commercial and associated institutions created by the PIB, National Petroleum Assets Management Corporation/ Company.

    Ogun stressed the need for critical examination of proposed changes in the fiscal regime to ensure that Nigeria does not discourage investments in oil and gas.

    He said: “It is our considered view that the PIB should allow for the optimisation of returns to Nigeria from its oil and gas resources without stifling investments and growth of the industry. The government will, therefore, have to strike a balance between taking a significantly higher stake from industry operations and ensuring the sustainable growth of the industry. To this end, we suggest that the National Assembly should arrange a meeting between the government represented by the Nigeria National Petroleum Corporation (NNPC) and the Oil Producers Trade Section (OPTS) to reconcile the disagreements on the fiscal regimes.”

    The unions called for the curtailing of the power of the Minister under the PIB to avoid the bureaucracy that characterises the management of the sector; fixing the tenure of the board, chief executive officer and other management staff of Nigerian National Petroleum Corporation (NNPC) and National Oil Company (NOC) to prevent undue interference of the board and ensuring that workers meet the targets set for them.

    Ogun said the Petroleum Host CommunityFund(PHCF) should cover communities hosting oil and gas resources and assets, including downstream infrastructure, adding that independent and effective regulators should be provided to ensure the bill’s success.

    “The Joint Venture(JV) has, however, been bedevilled by inadequate funding, as the government has not being able to meet its cash call obligations. The Petroleum Minister only recently pointed out that inadequate JV funding was negatively impacting on exploration and with it, reserves addition. The proposal under the PIB for the JV assets to be under a government-owned corporation does not seem to solve this cash call problem even with the proposed seed capital. There is no doubt that government’s finances are constrained, what will therefore, be more practical is for government to divest some of its holdings in the NPAMC while members of the public hold the rest. This way, the JV will be better funded,” he added.

    He said the oil firms are putting 10 per cent of their profits into the fund, adding that they cannot draw from it when their facilities are vandalised.

    According to him, regulatory functions are placed under the Ministry of Petroleum in line with the provisions of the PIB. He said the call for the establishment of the Upstream Petroleum Inspectorate (UPI) and Downstream Petroleum Regulatory Agency (DPRA) to regulate the sector is in order, adding that this is the only way to prevent abuse of power.

     

  • Presidential aide calls for quick passage of Petroleum Industry Bill

    The Special Adviser to the President on Political Matters, Alhaji Ahmed Gulak, on Friday said that the quick passage of the Petroleum Industry Bill (PIB) would create an enabling environment for the sector.

    Gulak told the News Agency of Nigeria (NAN) in Abuja that there must be complete deregulation of the oil sector if Nigeria must move forward.

    He said, “There must be complete deregulation of the oil sector if Nigeria must move forward; without complete deregulation, private investors will not come to build refineries.

    “As long as the subsidy regime is in place, we will always have problems. Our petroleum sector will not be developed; private investors will not bring in foreign investment to build the refineries.”

    According to him, indigenous investors are not willing to build refineries, if they can go and import petroleum products and be paid subsidy by the government.

    “So, if we want development in that sector; if we want availability of the product; if we want to add value to our crude oil, then we must deregulate the sector,” he said.

    On the state of Nigerian roads, the special adviser said the roads were dilapidating faster due to the overuse.

    He told NAN that pressure on the roads would significantly reduce once the rail system being planned by the government became functional.

    The special adviser urged Nigerians to support the Transformation Agenda of President Goodluck Jonathan to ensure rapid growth and development of the country, create jobs and tackle insecurity.

    He advised Nigerians to allow political parties in the country to grow along democratic lines, adding that it would be one way of delivering the dividends of democracy.

    He also appealed to Nigerians to uphold justice for the development and sustenance of “true democracy” in the country.

    According to him, true democracy will uplift and sustain the integrity of the nation with equity, fairness and justice in place.

     

  • ‘How to curb corruption in oil sector’

    ‘How to curb corruption in oil sector’

    A renowned economist, Adekunle Disu has expressed optimism that Nigeria can be salvaged from the scourge of corruption, particularly in the oil and gas industry which has metamorphosed into a hydra-headed cankerworm. in recent times. Industry sources estimate that over $680billion is lost to corruption annually in the sector due to sharp practices in which the new petroleum industry bill (PIB) seeks to address.

    Disu, who is also the Chief Executive Officer (CEO) of BOK Development Limited, while speaking on the topic; “Corruption in the oil industry” at the just concluded 2013 annual conference of the Nigerian Bar Association (NBA), Lagos branch, is optimistic that this colossal loss could be effectively checkmated if government will key his recommendations.

    They include strong political will to deal with corruption, transparency in the activities of the Nigerian National Petroleum Company (NNPC) and amendment of some sections of the PIB, particularly as it concerns the powers of the minister of petroleum.

    “To reduce the rot in the oil industry, there must be a strong political will to deal with the issue of corruption in our society. The corruption in the oil sector will only be a thing of the past if the political classes sincerely confront it strongly with every sense of altruism”

    “There must be a truly transparent and competitive process in the bidding process for oil blocs and oil related contracts with strict adherence to rules that govern international best practices. There must be dichotomy between the regulatory authority (NNPC) and the prospective bidders”

    “There must be adequate cost control and accounting procedures. Periodic accounting and audit by the NNPC and external audit firm will guarantee transparency and quality accountability,” Disu recommends.

    On the power given to the minister of petroleum in the current draft of the PIB, he is recommending a total review so as to avoid misuse of power by the occupants of the position.

    The powers ascribed to the minister of petroleum in the current draft of the bill have been described as ’draconian and omnipotent’ in various quarters which in itself could lead to corruptive practices that the bill seeks to eliminate. Under the current draft, the minister can inter-alia, grant and revoke leases unconditionally, determine royalties, decide the price of gas flaring and recommend members to the board of all the new companies and agencies.

    Other powers that Disu is recommending for a review is the minister’s ability to override the decisions taken by regulatory agencies, and to do all such other things incidental and necessary to the performances of the functions of the minister under the act. More disheartening is that the new PIB does not provide any mechanism to check possible abuse of these powers.

    Disu charged civil society organizations not to relent in their efforts at tackling corruption but to be more conscious not only about issues related to the oil industry but to issues in governance generally.

    “I believe that Nigeria can be salvaged from the scourge of corruption. I believe that the future of our country is bright. But we need to muster the courage at the political level to begin the process of cleansing the Nigerian stable. Only then can our efforts at economic development and social stability begin to yield fruit”, Disu contended.

  • Stop threatening Nigeria, Mark tells oil firms

    Stop threatening Nigeria, Mark tells oil firms

    The Senate President, David Mark, on Thursday in Abuja cautioned international oil companies (IOCs) operating in Nigeria to desist from threatening to park out of the country at the slightest provocation.

    Mark made the call while declaring open a two-day public hearing on the Petroleum Industry Bill (PIB) organised by the Senate joint Committee on Petroleum (Upstream and Downstream), Gas and Judiciary.

    “The international oil companies should not take undue advantage of Nigeria. What I do not want is when people begin to threaten that if you do not do this, we will park out of Nigeria.”

    According to Mark, we are conscious of the fact that there are frustrations in the oil industry, but it is only temporary as things are even getting better.

    The senate president said the sixth National Assembly tried to pass the bill but failed as several versions of the bill turned out at the end of the day.

    He said he was optimistic that this time around, there was only one version and encouraged all stakeholders to work together towards fast tracking its passage.

    “To demonstrate the importance of this bill, we have four committees working on it. We like as much as possible to fast tract this bill because it is beginning to hold up so many things.

    “Some investors when you talk to them they tell you that they are waiting for the PIB to be passed so we are anxious to get it out of the way,” the News Agency of Nigeria quoted the Senate president as saying during the presentation.

     

  • Senate won’t rush into passing PIB, says panel 

    THE Senate will not rush the passage of the Petroleum Bill (PIB) into law to avoid shortchanging Nigerians, the Chairman of its Committee on Gas Resources, Senator Nkechi Nwaogu, has said.

    She said efforts were being made to ensure the speedy passage of the Bill, adding that it was the desire of the committee to ensure that the legislation is all-encompassing, spelling the dos and don’ts in the oil and gas industry.

    Senator Nwaogu said the bill was an important document that should be given priority because it would remove fears about the oil industry, especially the gas sector. She added that if passed into law, it would address bottlenecks in oil and gas operations in the country.

    The Bill has passed the first and second readings and is at the domain of public hearing. She noted that it would be detrimental to the economy to rush the processes of passing the Bill into law, without allowing experts’ input. This is to ensure that, at the end of the day, the Bill would be seen as a democratically-assembled document comprising inputs from experts in oil and gas and other sectors, Senator Nwaogu said.

    “That is why we are going to hold a public hearing, and for my Committee on Gas. We want to ensure that this document has a transparently identifiable dos-and-don’ts for gas exploration, production and processing and gas distribution.We don’t want a situation where we would say we have a petroleum industry law that does not take into account the peculiarities in gas exploration, processing and distribution,” she stated

    “We want to ensure that the volume of gas we have translates into increase in revenue profile for the country, and ensure that the new document gives opportunity for investment in the gas sector, as well as ensure that there would be easy entry into gas business in the country and easy exit of gas business at the same time.

    “We expect that this petroleum industry law as it affects gas, would help to create more wealth for Nigeria, more employment for Nigerians, and at the end of the day place Nigeria in the committee of nations as regards gas production and gas exploration,” adding that domestic gas development could be used to reduce the continuous abuse of our environment through deforestation and through gas flaring by putting a stop to the practice.

    She said if there is a law that prohibits gas flaring and ensures that we create a conducive environment for investors to come into the gas infrastructure business, firms would come in from outside the country that would want to establish a network of gas pipelines.

    She agreed that it is only when the government offers incentives, as well as taking some deliberate policies to attract investors into gas development, that people would come in to invest, adding that both the content companies would come and have a share of gas development projects in the country.

    She also said the committee would ensure it X-rays the PIB to ensure that gas and its operations in the country are well-carried out and that the law would protect investors, punish offenders, and ensure that those caped-wealth by some oil companies for many years, were released into the basket of investible assets where Nigerians could find them attractive to go and bid for them.

  • ‘Why marginal fields’ operators need more funds’

    The Director, Pillar Oil Limited, Seye Fadahunsi, has advocated additional fields and funding for successful marginal fields operators.

    This, he said, would make them grow and use the same skills they had developed to generate commercial value and provide employment for Nigerians, and also add to the gross domestic product of the country.

    He said: “The government should carry out a bid round, which should be open to indigenous groups that aspire to get into the exploration and production business. And for those who are young and small in the exploration and production business, it is an opportunity for them to grow, while for those who are aspiring to get in and those who are in and are just starting, it will be an opportunity for them to make progress. This will help achieve the drive for increased indigenous participation in the sector.”

    Speaking with The Nation in Lagos, Fadahunsi said though the Petroleum Industry Bill (PIB) is yet to be passed into law, he said it would be nice if there are special terms for marginal field operators clearly defined in the bill.

    He said because there is production entry in the bill, most of the marginal producers would likely be small producers, but he expressed optimism that the bill would be beneficial to marginal producers to enable them to become productive and make it commercially viable for people to develop such fields.

    “We have been waiting for the bid round for some years now. A lot of people are getting to a point where they have begun to wonder whether it would ever happen, but if it does happen, it should be seen as an opportunity for either those small producers or those who want to get into the system,” he said, adding that the bid round should be restricted to indigenous companies only

    But to be successful in the business, Fadahunsi said there is the need for good analysis before one gets into it. In addition, there is the need for appropriate technology to be put in place to ensure achievement of commercial value.

    He said his company was successful because it deployed a lot of strategies, including funding mechanism to ensure that it realised its objectives. “Finding money was a challenge but we eventually put up a partnership and we started production,” he said, adding that the field is producing about 2,500 barrels per day and there are expectations that in the next two years, given the opportunity, it would be producing close to 10,000barrels per day.

  • Things were at a low ebb

    Things were at a low ebb in the energy sector in the first half of the year. The non-passage of the Petroleum Industry Bill (PIB) constituted a major setback on investment drive. The government, however, continued to push its power sector reforms, EMEKA UGWUANYI reports.

    Oil and gas industry

    Crude oil theft took centre stage in the upstream sector of the industry reaching an all-time high. The government and operators admitted that crude theft reached an alarming level in the first half of the year, indicating that the crude thieves were winning the crude theft battle despite the joint task force (JTF) comprising officers of the armed forces and the police.

    Shell Petroleum Development Company Limited (SPDC), which is the most affected company, a couple of weeks ago announced its intention to divest all its onshore and near offshore assets because the assets are accessible to the oil thieves.

    Shell’s pipeline, especially the Trans Niger Pipeline (TNP) was shut several times within the period under review. The company declared a couple of force majeure on oil supply as a result of continued vandalism of the pipeline and sometimes explosion arising from the activities of vandals.

    On the review of SPDC Joint Venture interests, the company said: “Today, Shell’s 100 per cent-owned subsidiary, SPDC, announced the initiation of a strategic review, consultation with partners, and the potential exit from the interests it holds in some further onshore leases in the Eastern part of the Niger Delta, subject to partner and regulatory approvals. The SPDC JV produced around 750,000 barrels of oil equivalent (kboe) per day in 2012 from 28 Oil Mining Licenses (OMLs) across the Niger Delta, both onshore and in the near offshore. SPDC has been following a strategy of selective divestments of its onshore portfolio, concentrating the operating footprint into a smaller, more contiguous area, while supporting the Government’s policy of encouraging investment by indigenous companies in the Nigerian oil and gas industry. Since 2010, SPDC has sold its interest in eight OMLs for a total of $1.8 billion.”

    The Federal Government has been seeking assistance of foreign governments in the fight against crude theft as it contributes to reasonable decline in revenues and oil export.

    The Petroleum Industry Bill (PIB) continued to stall fresh investment in the oil gas industry in the first half of the year. Besides the award of the $3.1 billion contract for the construction of the floating production, storage and offloading (FPSO) vessel for Egina deepwater oil field to Samsung Heavy Industries, a project owned by Total and NNPC Joint Venture, no very significant project took place within the period under review.

    The Federal Government and industry stakeholders are prevailing on the members of the National Assembly to harmonise various interests and pass the bill into law.

    Drilling results also showed hope of commercial discovery in Oil Prospecting Licence (OPL) 310 and Oil Mining Lease (OML) 113. Both assets are located offshore Nigeria and close to Lagos State. OML 113 interest holders include Yinka Folawiyo Petroleum (Operator), Vitol Exploration Nigeria, Chevron, P.R Oil and Gas and Lekoil. OPL 310 owners are Optimum, Afren Plc and Lekoil.

    Apart from some marketers that are still being interrogated by the Economic and Financial Crimes Commission (EFCC) over involvement in fuel subsidy fraud, the downstream sector ran smoothly in the first half. Despite a couple of attacks on the products distribution channels, products supply was regular and the government made part payment to marketers who imported fuel during the period under review.

    Gas

    The dispute on payment of levies between Nigeria Liquefied Natural Gas Limited (NLNG) and the Nigerian Maritime Administration and Safety Agency (NIMASA) worsened within the period under review.

    NIMASA has blocked NLNG’s Bonny channel in the past 11 days preventing exit from or entrance of NLNG’s owned and charted vessels into the channel. The NLNG took the case to court and despite court order that NIMASA shouldn’t obstruct NLNG’s operation or further request to pay levies pending determination of the case, nothing has changed.

    NLNG’s General Manager of External Relations,Dr. Kudo Eresia-Eke, said because of the blockade, “we have had to drastically reduce production and gas intake. Because of the blockade, we cannot meet obligations to our buyers. We have, therefore, had to declare Force Majeure as at June 28, 2013.”

    He also said the cost of the blockade in terms of revenue loss is huge. He said the cost couldn’t be quantified until the blockade is lifted but certainly it is huge. The company is contemplating to shut down operation if the blockade continues.

    NIMASA’s Deputy Director/Head, Public Relations, Isichei Osamgbi, said the blockade of the channel was necessitated by NLNG’s action. He said: “This course of action was forced on NIMASA by the NLNG’s subsequent refusal or/and failure to abide by the outcome of the negotiated settlement arrived at the mediation process it willingly instigated and subscribed to, after reaching agreement with NIMASA on its outstanding debt and paying US$20million out of it and its continued flagrant disregard for Nigerian laws.

    “By its action, the NLNG has trivialised the mediation process and the position of the Federal Government of Nigeria whose Nigerian National Petroleum Corporation owns and holds 49 per cent of the shares in NLNG and which endorsed the agreement reached that NLNG should pay its taxes/levies and observe all its obligations under the laws of Nigeria in which it is operating.”

    The dispute is costing the country huge revenue loss, and if the force majeure lasts longer than necessary, it would negatively affect domestic supplies.

    Also, the Federal Government, according to the Group Executive Director, Gas and Power, Nigerian National Petroleum Corporation (NNPC), Dr. David Ige, is on the neck of oil firms in the country to meet their gas supplies obligation to meet domestic demands including supplies to thermal power plants. He also said the government is building pipelines for some of the power plants to ensure increased gas and power supply to Nigerians.

    Some Nigerian companie in the first half of the year increased their efforts to deepen consumption of gas as fuel by Nigerians. They include Dangote, Oando, NIPCO and Lagos State Government through promotion of use of compressed natural gas (CNG) and liquefied natural gas (LPG) by vehicles and households.

    The period saw change of baton in leadership at the Department of Petroleum Resources (DPR) with the entrance of Mr. George Osahon and exit of Mr Osten Olorunsola.

    Power

    The Federal Government continued with its efforts to accomplish some milestones in the power sector reform. The buyers of the generation and distribution assets were given up to October to complete payment of the outstanding 75 per cent cost of their purchases. The assets include 11 distribution companies and six generation companies.

    Also, the process of selling the 10 power plants of the National Integrated Power Project (NIPP) started in the first half of the year. The road-shows aimed at sensitising prospective investors locally and internationally to buy into the project is still ongoing and the sale is expected to be completed before end of this year.

  • Why PIB is delayed, by Makarfi

    Why PIB is delayed, by Makarfi

    Chairman, Senate Committee on Finance, Senator Ahmed Makarfi, has blamed the slow passage of the Petroleum Industry Bill (PIB) on the extreme views of the political class, which have been heating up the polity.

    He explained the inability to pass the bill has had negative impact on investment in the oil and gas sector.

    The former governor of Kaduna State spoke at the weekend in Abuja at the public presentation and review of the Nigerian Leadership Initiative White Papers Volume 2; Reform of Taxation System in Nigeria.

    Makarfi described the PIB as an urgent national matter that needs to be resolved sooner rather than later to give clarity to investors in the petroleum

    According to him: “Nobody is against any particular community collecting benefits.

    “The debate is not whether the oil- producing communities are entitled to benefits or not. But the question is what kind of benefits and how?”

    The senator disclosed that the National Assembly is working hard to have a balanced, fair and equitable PIB.

    “The National Assembly has to start afresh now because the bill was doctored when it was brought back with new inputs that were not there initially in the former bill that was introduced.”

    He stated that the National Tax Policy, another comprehensive reform document designed to address some of the identified gaps in the tax system, is yet to be fully implemented since its approval by the National Economic Council.

    The Chief Executive Officer, Nigeria Leadership initiative, Mr. YinkaOyinlola, noted that the white papers are: “authoritative document seeking to provide solutions to problems in the tax sector.”

    He said the initiative focused on taxation reforms because taxation is “a social contract between the citizens and the government.”

    The senior partner, Price water Coopers, Mr. Ken Igbokwe, noted that the country needs a reform of the tax system to fall back on when the oil is gone.