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Oil bill, threat to $95bn investment plans – Stakeholders

By Emmanuel Aziken & Yemi Adeoye
Outpouring of disaffection against the omnibus Petroleum Industry Bill (PIB), continued at the Senate public hearing yesterday even as the major oil producers warned that their plans to invest $95 billion in the sector over the next five years could be derailed by the provisions of the proposed law.

Aside the major producers who spoke on the bill yesterday, the Rivers State Government and the Indigenous Oil Producers flayed some major thrusts of the bill.

The Rivers State Government, in a presentation by the Commissioner for the Environment, Mr. Ezekiel Amadi, demanded a new sharing formula for oil revenue that would consider the possessive rights of host communities.

According to it: “The bill should provide for a 25 per cent revenue sharing for the producing states and communities on a “carry and free holding” basis in a ratio of 10 per cent to the states and 15 per cent to the producing communities.”

In the presentation of the Oil Producing Trading Section (OPTS), yesterday made by its chairman, Mr. Basil Ominiyi, the group said the industry was proposing expending over $80 billion over the next five years on oil and gas projects.

While noting that the gas sub-sector grew by 90 per cent with an expenditure outlay of $5bn in the last five years, he said the gas sub-sector proposed to expend $15bn over the next five years.

On plans to grow the oil sector, he said: ”Our multi- billion dollar investments in the deep offshore mega projects have led to an additional oil production of more than 600,000 barrels/day with more production coming on stream.

”The industry plans to invest over $80bn in oil projects for the coming five years.’’

Ominiyi, who is also Chairman, Shell Companies in Nigeria, however, picked loopholes in the bill, citing fiscal provisions and limited capacity for self- financing.

According to him, the fiscal provisions in the bill would make new oil and gas projects estimated at $95 uneconomic.

Managing Director of Shell Nigeria, Mr. Mutiu Sumonu, in another presentation, said the provisions of PIB would make gas exploration in the country uneconomic.

“The existing fiscal legislation recognises the fundamental difference between oil and gas, but the proposed PIB treats oil and gas fiscals equally, making all gas projects uneconomic.’’

In its submission, the Rivers State Government flayed the concept of the bill which it claimed was done without consultation with major stakeholders from the oil-producing regions of the country.

“The Federal Government constituted the Petroleum Sector Reforms Committee without any deliberate attempt at involving the states and communities where petroleum is produced. The situation once more reminds us of the recommendations of the Willink’s Commission of 1958 which provided that people who are no Niger Delta inhabitants could not effectively legislate for the people that inhabit the difficult terrain of the Niger Delta.

“In so doing, the PIB has woefully failed to (a) address or redress the issues that have given birth to the current challenges in the Niger Delta and (b) guarantee the uninterrupted flow of the Nigerian oil and gas with a view to restoring and recapturing investor- confidence.

“In this wise, we suggest that whatever may be the budget of these establishments, since they are national institutions, they ought to come under the purview of the National Assembly as has been the case so far.”

“Rivers State requests that the right of individuals and institutions of state to own shares in the Nigeria National Petroleum Company should be enshrined in the law on the basis of equity participation using possessory rights of the land dwellers/host communities of the petroleum producing region.

“In summary, we propose that the Bill be withdrawn and completely redrafted to ensure respect for the component parts of the Federation, fair play and equity.

In its own submission the Indigenous and Marginal Field Operators in their submission articulated by Mr. Austin Avuru demanded for an industry law he said

*Recognises the peculiarly unprospective leases often available to Indigenous Operators, being the ones relinquished by IOCs due to their low productivity ranking or small size of the discoveries. The new Law should therefore create a fiscal regime that moderates the effects of these geological realities.

*Deliberately encourages growth of individual companies up to a threshold up to 50,000bopd. It is only in this situation can the nation aspire to achieve even 20% indigenous production by 2020.

*Grants Nigerian companies, on an open and competitive basis under clearly defined criteria, preferential access to onshore and shelf acreages”


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