Major Oil companies in Nigeria have scheduled an emergency meeting with their Joint Venture partner, the Nigerian National Petroleum Corporation (NNPC), to iron out some grey areas in the just passed Petroleum Industry Bill (PIB).
This is as the Organisation of Petroleum Exporting Countries (OPEC) has commended President Muhammadu Buhari and the National Assembly on the PIB.
OPEC secretary-general, Dr Mohammad Barkindo, gave the commendation at the ongoing 20th Nigeria Oil and Gas Conference (NOG) in Abuja, yesterday.
Also scheduled to be in the meeting with the International Oil Corporation (IOCs) under the aegis of the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry, are the minister of state for Petroleum Resources, Timipre Sylva and the director of the Department of Petroleum Resources, DPR, Auwalu Sarki.
A reliable source in one of the IOCs told LEADERSHIP that the meeting will deliberate on controversial areas like taxes and royalties which they have contested before passage of the Bill.
The IOCs, it was reliably gathered will be represented at the meeting by Chairman, OPTS, Mike Sangster.
Sangster is the managing director/chief executive of Total Upstream Companies in Nigeria and Representative of Total Group, now TotalEnergies.
The PIB was passed by the National Assembly last Thursday.
The new bill prescribes 30 per cent of NNPC profits to fund exploration activities in “frontier basins”.
Clause 4 of the new bill calls for setting up of a Nigerian Upstream Regulatory Commission, (NURC), to enforce, administer and implement laws, regulations and policies covering upstream petroleum operations while Clause 29 prescribes creation of a Nigerian Midstream and Downstream Petroleum Regulatory Authority, (NMDPRA), for regulation of midstream and downstream operations.
Clause 53 requires that the Minister of Petroleum incorporates the NNPC into a Limited Company with 100 per cent FGN share ownership not later than six months after the coming into effect of the new Act.The new entity shall operate in accordance with the Companies and Allied Matters Act, (CAMA)
One of the particularly contentious issues has been the question of the Community Development Fundpayment. Representatives from the oil-producing areas inevitably demanded five per cent of the total profits of the oil firms to be paid to host communities. Theywere, however, out-voted by the majority. Under Clause 240 (2), the matter was settled at three per cent.
Other important aspects of the new bill include finance, taxation, environment and centre gas supply and regulation and gas-flaring. Tax and finance provisions have been streamlined to ensure greater transparency. The Upstream Regulatory Commission is empowered to monitor and ensure compliance with environmental regulations.
Operators must submit environmental plans for both prevention and remediation on environmental pollution. The new bill prohibits gas-flaring, except under specified conditions: (i) emergency; (ii) exemption expressly granted by the Commission; and (iii) acceptable safety requirements under established regulations.
While the industry will operate on a free market basis in terms of demand and supply, operators will have to give some consideration to ensuring adequacy of supply to the domestic market and local refineries. The new bill frowns at monopolistic behaviour while invoking the rules of the to ensure sound market Federal Competition and Consumer Protection Act 2019 as the standard for fair market competition.
Meanwhile, the theme of the 2021 NOG conference is: “Fortifying the Nigeria Oil and Gas industry For economic growth and Stability.”
“Mr President, allow me, on behalf of OPEC, to congratulate you on the Petroleum Industry Bill (PIB), which was just passed by both chambers of the National Assembly of our great country.
“This long-awaited legislation for the oil and gas sector will help guide the necessary reforms designed to strengthen institutions, solidify regulatory and fiscal frameworks and attract the much-needed investment in a sustainable manner.
The ninth National Assembly has engraved itself in gold in passing the Petroleum Industry Bill,” Barkindo said.
He noted that OPEC was deeply indebted to President Buhari for the leading role he has played and continues to play in support of the OPEC-non-OPEC Declaration of Cooperation process.
“This historic achievement has ushered in a new era in the global energy cooperation as OPEC and its non-OPEC partners continue to provide crucial support to the oil market, in the interest of producers, consumers and the global economy,” he said.
He also commended the minister of state for Petroleum Resources, Chief Timipre Sylva, for his leadership and active participation to ensure a lasting stability in the oil market.
“On the domestic front, your ongoing contributions and leadership in guiding Nigeria’s energy industry into the future are both impressive and commendable,” he said.
On the 50th anniversary of Nigeria membership of OPEC, Barkindo said it would be celebrated with a special OPEC bulletin.
“We commemorate this golden anniversary with a very special edition of the OPEC bulletin, which provides us with a splendid walk down memory lane from July 1971 when Nigeria joined OPEC to the present day.
“This collector’s edition will be a fitting tribute for a nation that has been so instrumental in the OPEC’s rich history.
“OPEC and Nigeria have sown the seeds of friendship to build a highly fruitful and mutually beneficial relationship, forging strong ties that will last forever.
“Both the Nigeria at 50 special edition of the OPEC Bulletin and the 60th Anniversary Book chronicle will pay due tributes to this enduring partnership,” he said.
On the global economy, he predicted a growth of 5.5 per cent this year with recovering recorded so far.
“We forecast world oil demand to rise by 6.0 mb/d . Both the economy and oil demand are expected to see accelerated growth in the second half of this year.
“There is, however, a range of uncertainties that we are monitoring closely.
“These include an elevated risk of inflation due to massive financial stimulus programmes, uneven vaccine rollouts across the world and the COVID-19 Delta variant, which is now even impacting countries with high vaccination rates.
“This challenging backdrop will require the Declaration of Cooperation (DoC) producers to remain proactive, flexible and vigilant.
” This prudent approach moving forward will enable the DoC to remain agile and responsive while avoiding unwanted market imbalance after April 2022,” he said.
He commended the organisers of the NOG and urged partcipants to effectively participate and make contributions that would help drive the needed economic growth and stability of the sector.