Oil majors not satisfied with PIB

By Aminah Carew

Some major oil producing companies and other players in the industry have raised concerns over some provisions of the Petroleum Industry Bill (PIB) 2020.
This was at the first day of the public hearing, a necessary stage of the consideration and passage of the bill.
The legislation, which was transmitted to the National Assembly last year after it had suffered setbacks for about 20 years, proposes the scrapping of the Nigerian National Petroleum Corporation (NNPC) and the Petroleum Product Pricing Regulatory Agency (PPPRA).
It also proposed the creation of the Nigerian National Petroleum Company Limited – after all the assets and liabilities of the NNPC have been identified by the ministers of petroleum resources and finance.
The PIB also seeks to establish the Nigerian Upstream Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
At the hearing organised by the Joint Committee on Petroleum Upstream, Downstream and Gas, was the Oil Producing Trade Section (OPTS) who expressed dissatisfaction with some provisions of the bill.
The chairman of OPTS, Mike Sangster, made his presentations on behalf of Total, Chevron, Exxon Mobil and Shell companies.
Top of their concerns was deepwater developments, which he said have contributed significantly in maintaining Nigeria’s oil production levels by offsetting the decline in the Joint Venture production.
Mr Sangster complained that the PIB shows that the Deepwater provisions do not provide a favourable environment for future investments and for the launching of new projects.
To ensure investors are encouraged to finance Deepwater projects, the PIB should grant Deepwater oil projects a full royalty relief during the first five years of production or a graduated royalty scheme as detailed in their submission, he said.
He also proposed that PIB should remove Hydrocarbon Tax considering that companies will still be subject to CIT.
The group said the bill does not address the key challenges facing gas development in Nigeria, such as inadequate midstream infrastructure, regulated gas pricing, huge and long outstanding debts, etc., thereby potentially jeopardising the realisation of government’s aspirations for the domestic gas sector. It, therefore, suggested that PIB “provide a clear path for transitioning to free market-based pricing, not add additional compliance conditions on domestic gas delivery obligations as a precondition for export gas supply and allow pre-existing contracts and agreements to run their course”.