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Petroleum minister reassures industry, outlines agenda

Mrs. Diezani Allison-Madueke, the Minister of Petroleum Resources was at the Offshore Technology Conference (OTC) in Houston, Texas last month where she engaged Nigerian journalists including Hector Igbikiowubo, Editor of Sweet Crude on contemporary issues concerning the Nigerian oil and gas industry, including the Petroleum Industry Bill (PIB), her agenda for the industry and the outcome of her consultations with international oil and gas companies at the conference and exhibition.

Until her recent appointment, Allison-Madueke, a graduate of architecture from Howard University, USA had been Executive Director of the Shell Petroleum Development Company (SPDC) in charge of External Relations until 2007 when she was appointed Minister of Transport by late President Umaru Musa Yar’Adua, redeployed in 2008 as the Minister of Mines and Steel Development only to be retained by President Goodluck Jonathan and appointed the first female minister of petroleum resources in Nigeria.

Excerpts:

What has been the response of foreign companies to the federal government’s plans for the gas sector?

It is clear to everybody that Nigeria is rich in abundant gas deposit yet untapped. This is the main reason why several companies are showing interest in participating in various gas projects in Nigeria even though the country has yet to come up with a licensing round purely for gas. During my period of staying in the USA, I am expected to meet some of the companies planning to invest in the construction of petrochemical, fertiliser and methanol plants in Nigeria. These companies know more than anyone else what the tenets of the law will be. They know that once the Petroleum Industry Bill (PIB) is signed into law, Nigeria would become open as a gas exploration and production ( E&P) country. They are obviously also aware that they will get advantages in the market, if they move very stringently. It would be absolutely wonderful for the country, if we are able to sign the first line of agreement on gas E&P license before the end of the year with one or two of these giants- because their intention is to possibly make Nigeria a West African hub for petrochemicals, which again would be a first for us. So, it is very important that we foster this correctly and seize the advantages that we can get out of it. This is a major issue for me because the Gas Master Plan itself, inherent in the PIB is a major piece of legislation, and one that I want us to milk to the greatest advantage for the country. All hands are on deck to ensure that the PIB is signed into law by the beginning of August, 2010. To that intent as I get back I would sign approvals for the first 26 or so priority regulations needed to guide the implementation of PIB when it has been passed into law. This is very important for the Petroleum Ministry and NNPC to prepare very well for the implementation challenges. In this regard, immediately I get back into the country, we will kick-off phase one of the priority regulation.

What will happen to several undeveloped fields abandon by international oil companies after the enactment of new laws for the oil and gas industry by the National Assembly?

The fact remains that once the PIB and the Gas Master Plan have been signed into law, bringing about access, you will find out that a lot of indigenous and IOCs will come in for the exploration of gas. They will take up some of the smaller acreages that many of the larger IOCs find uncompetitive to develop. Those particular acreages can now be taken up by these smaller companies because they will now have open access to the traditional pipelines owned by the IOCs for a stipulated time. This implies that as an indigenous operator or international operator with smaller capacity, you are not concerned with the infrastructure and the financial obligations of laying pipelines which is enormous. We can confidently say that the structure is already in place in Nigeria despite the integrity problems. The retail side of the downstream sub-sector would be exposed to new business and developments. I keep saying that it can only be imagine, the kind of the pull down effect in terms of employment generation, capacity building and transfer of technology which is now extremely possible.

How do you intend to address the concerns of multinationals and indigenous operators over fiscal issues in PIB?

I have in the past two weeks carried out in-depth examination of recommendations made by the NNPC team for approval in the PIB. You will realize that the Senate has reviewed some of the observations made in the PIB during the public hearing and this is separate from the one that is being handled by the NNPC. Fiscal regimes are very pertinent because they are quite extensive and that is the area of concern by the IOCs on issues affecting the NNPC version of the PIB. So, at this time we are still pulling it apart, and looking at it with a very fine tooth comb. We have not completed it because we are in the middle of it we have to come out because of the OTC, and we will continue with it when we go back to Nigeria. We have spoken with Professor Adigwe who is the consultant of the Senate on the PIB because he made some revisions of particular clauses; and sections of the bill very extensively. However, the two groups have not harmonized in any form, at this point in time, the NNPC group is not formally aware of what the Senate revisions look like. So, it is onus now on me to work with the Senate along with the NNPC of course, which is under the Petroleum Ministry to ensure the harmonization of interests in all aspects of this particular bill. There are also stakeholder concerns, some of them which have been addressed by the Senate revisions. But Already, I am getting major revisions from major stakeholders within the Niger Delta. Stakeholder groups have actually gone out and paid consultants to prepare revisions of the PIB, which they feel are more sympathetic, or emphasize more with what the communities need to get out of this bill. So, it would be fool hardly for me not to ensure that I have looked at all these aspects of the PIB, rubbing minds together with the Senate team to try and rationalize and harmonize all of them.

At the end of the day, we hope to have a comprehensive history making piece of legislation.

Do you have a specific time frame within which you expect to have the PIB signed into law?

As we all know, we cannot afford not to get the best with all of those involved; good governance, the communities, the IOCs and the Federal Government. As far as I am concerned, I know the Senate has given a deadline of three months to harmonize and align all provisions of this particular bill which is why I keep saying that by the beginning of August we will move to get the bill signed into law. That gives us three months. I am also looking at the regulations needed to implement the act which will also take that period of time to prepare. There is no point having the act signed into law and not being able to implement it in the manner in which we should. That was the same situation I met in the Ministry of Mines and Steel. The 2007 minerals and Mines Act which until I left, we made efforts to implement. I am trying to work simultaneously on all forms because we don’t have the time to do all this. We have six months in real time as far as I am concerned in this dispensation. By the time we hit 50th Independent Anniversary celebration, anything we have not actually achieved which entails agreements and the signing of the Act into law, and any other project will be not being implemented may not be achieved. I am hoping that we would have captured very aggressively the key areas that we have being trying to achieve.

Why is the review of PIB necessary considering the time left for the current administration before the general elections of 2011? What about issues of conspiracy concerns?

I don’t intend to directly favour the IOCs, but because we really have to look at certain things quite rationally to ensure that at the end of the day we have a win-win situation for the country. The biggest concern that we have is the controversies surrounding deepwater fiscal regimes .Nigeria must make revenue from royalties and tax, and also adequate revenues from deepwater terrain. How this is done, and the manner in which the fiscal regimes are carried out are a different matter. We assume that as we start the discourse with the IOCs, we can actually promise them that in the next couple of weeks I would start meeting with them personally to begin to discuss the issues. The moment we start the discussion, the idea is to get very quickly to the point where there is some comfort in terms of going forward with the harmonisation of the bill.

We will ensure that very quickly we get through this particular issue, particularly with the fiscal regimes. We have just begun to tear the bill apart. I have to look at what the Senate has done look at all of them on a table before I am in the position to finally determine what we need to do.

What is your agenda for the oil and gas industry?

At this point in time, I would like to see us get excited about the oil and gas sector. I would like to deal with some of the big issues that would make a lasting historical impact on this country such as the PIB, the Gas Master Plan, but at the same time deal with the basic issues that affect the masses. If you ask the masses today what affects them, it is fuel supply. Domestic gas supply is another major issue for us in terms of the requirement for power plants and in particular the National Integrated Power Projects (NIPPs). At this point in time, the ministry of Petroleum Resources and NNPC are fulfilling the entire gas requirement to the traditional power plants. The problem that we have is that the traditional power plants are not working at maximum capacity at this time. They were actually stripped down and refurbished a few weeks ago in order to give them the ability to take in the gas that was coming in. We had quite a redundancy in our gas provision on the other hand, because of the integrity of the gas pipelines and security issues. We are working very hard to make sure that in the next few weeks, we will proffer solutions in terms of the NIPPs.

On the whole, I am quite excited because there are key things that need to be addressed, in ensuring that the PIB is signed into law and we can implement them, so that we can open up the country for gas exploration. We will ensure that there is adequate gas supply not just in the traditional power supply that we sort out the gas issues for the NIPPs which is critical for us. The same time, this dispensation will be do all of them if we can get these laws implemented. We will be working very closely with the Ministry of Power and with the President Goodluck Jonathan on the issue. The Finance Minister will be in the middle of it all and we will pull in any other ministry we see that is necessary. This was not really the case in the past, we were very territorial about our sectors, thus we cannot afford that any more, and so we will really and truly work together as a team this time. We will look at the overall picture in the areas we have been talking about. We will also look at the issue of PMS supply and the issues of deregulation; recapitalization is uppermost in our minds


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