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NNPC seeks cut in duration, split of oil licenses

By Michael Eboh

Abuja—The Nigerian National Petroleum Corporation, NNPC, yesterday, called for a downward review of the duration of petroleum licences as stipulated in the draft Petroleum Industry Administrative legislation, PIAB, currently before the National Assembly.

In a statement in Abuja, Group Managing Director of NNPC, Mr. Maikanti Baru, also recommended the splitting of petroleum licences into two components for prospecting and production phases.

Baru made this presentation at the public hearing organized by the House of Representatives Committee on the Petroleum Industry Administrative Bill (PIAB), Petroleum Industry Fiscal Bill (PIFB) and the Petroleum Industry Host Community Bill (PIHCB).

Group Managing Director of the NNPC, Dr Maikanti Baru

He advocated a re-think of the duration of licences as proposed in the PIAB which stipulates initial duration of 25 years for onshore and shallow water petroleum licences and 30 years for deep water and frontier acreages.

Baru proposed five years prospecting licence for onshore and shallow fields and a duration of 10 years for deep offshore and frontier basins.

He also recommended 20 years production lease for onshore and shallow fields and deep offshore and frontier basins, noting that only the production lease period should be renewed for not more than 20 years.

The NNPC’s recommendation under the PIAB also seeks a break-up of Petroleum Licence into Petroleum Exploration Licence, PEL — to prospect for petroleum, while the second component to be known as Petroleum Lease, should be created to cover the production phase to search for, win, work, carry away and dispose of petroleum.

Baru said the proposed split would prevent a situation where operators would sit perpetually on oil acreages.

On the PIFB version of the proposed oil industry law, Baru said the NNPC    is recommending a three-stage licences regime consisting of: Exploration Licence, EL, – to explore for petroleum on a non-exclusive basis; Petroleum Exploration Licence, PEL – to prospect for petroleum on exclusive basis; and Petroleum Lease (PL) – to search for, win, work, carry away and dispose of petroleum.

Beyond the clause by clause recommendations, the NNPC also advocated the simplification of the fiscal system for ease of implementation and to ensure progressivity.

It called for expunging all regulatory issues out of the draft legislation to empower the Commission to regulate the industry effectively.

NNPC highlighted the need to introduce and provide clauses that will ensure easy review of provisions of the bill in response to economic, technical and other considerations, while disallowing legislation on issues bordering on contracts.


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