June 9, 2009

40yr old petroleum law, a drawback – Minister

By Oscarline Onuemenyi

ABUJA -THE Federal Government on    Tuesday stressed the need to review laws guiding the petroleum and other related industries in the country.

The Minister of State for petroleum, Mr. Odein Ajumogobia, who made the remark on the occasion of the inauguration of the 185,000 barrels per day capacity Akpo Floating Production Storage and Offloading Vessels, Total’s first deepwater development in Nigeria , said the country had no choice than to reform its oil and gas industry in line with modern developments.

He said, “The petroleum industry is governed by a 40 year old legislation. Everyone in the industry agrees that the laws as they were in 1969 cannot be suitable for the industry in 2009.

“I think there is a consensus that the law needs to be reviewed. The PIB is a significant improvement on what we had before. When you are transiting from one legal regime to another, there is a transition period.”

Ajumogobia assured operators in the industry of government’s resolve to correct the many defects in the industry, adding that there should be no “concerns over that small period of uncertainty on what impact the change will be on existing contracts.”

He added that, “I have no doubt that we will resolve those issues. We will meet and resolve them. We have discussed them; ultimately it is the tension over the return on investment which our partners expect, their expectations and also the government as the resource owner, our sense of entitlement, our take from the operations.

“There is also a tension between business men when you are negotiating. Our partners are not unduly concerned. They have said they supported, it is good idea for the industry, that it will solve many of the problems, particularly the funding problem where the NNPC has not been able to meet its obligations in the joint venture.”

According to the minister, the oil and gas reforms will solve many of the problems afflicting the industry, particularly the funding problem where the Nigerian National Petroleum Corporation has not been able to meet its obligations in the joint venture.

He said, “In the new regime, we will look at investment opportunities and agree on how much we need to invest and raise the money to invest which will be for the benefit of all of us in Nigeria .”

Also speaking at the presentation, the Executive Officer of Total Worldwide, Mr. Christopher De Margerie, urged the Nigerian authorities to fast_tract the reforms in the petroleum sector, even as he expressed dismay over the poor approval system in the country.

According to him, the company was worried by some things like approval, investment decisions and payments, adding that the company supported the reforms in principle but was yet to know the details and their implications.
He said, “It is part of what we are waiting for in the bill to find solutions to the problem areas. On behalf of the partners, we are happy to work in your country, we are happy to have the opportunity to discuss, negotiate and achieve.

“We are willing to develop the sector together. We know there are security challenges, as part of our goal and commitment, we are dedicated to common success, You will find the joint venture always supportive, finding solutions to do more in the interest of your country and our company.

He further noted that with recent government emphasis on domestic gas policies, processes and legislations, Total was already putting into place partnerships, structuresand procedures to support government desire to use the domestic gas agenda to boost the economy, create jobs and wealth.

On his own part, the Managing Director of Total’s Upstream  Companies in Nigeria , Mr. Guy Maurice, explained that the AKPO field was the company’s third major deep water development in Africa, after Girassol and Dalia fields in Angola .

He said, “Total’s operations in Nigeria, which started in 1962 has continuously embraced new frontiers and overcome new challenges to make Total Nigeria the most active multinational oil and gas company with the most rapid portfolio, reserves and production growth.”