Benefits, Opportunities of PIB

Fri, Mar 15, 2013

By publisher

5 MIN READ

Diezani Alison-Madueke, minister of petroleum resources, outlines what opportunities and benefits are open to Nigerian and foreign investors with the passage of the Petroleum Industry Bill

|  By Maureen Chigbo  |  Mar. 25, 2013 @ 01:00 GMT

THE Petroleum Industry Bill, PIB, which has passed second reading in the Senate is expected to usher in new opportunities in the nation’s oil and gas industry. Beside attracting new investors to the nation’s oil and gas industry, the PIB would also ensure that a new fiscal regime is put in place to address all issues of equity among stakeholder. The PIB will also take care of the instability in the Niger Delta and ensure that the country’s revenue is well-managed and transparently allocated for a balanced development. Diezani Alison-Madueke, minister of petroleum resources, made these clarifications at the Africa Energy Summit session during the Cambridge Energy Research Association, CERAWEEK, 2013, in Houston, Texas, United States.

“The PIB will ensure the development of our abundant Oil and Gas reserves, encourage significant infrastructural development and situate the gas revolution,” said Alison-Madueke, who was represented by Abiye Membere, NNPC group executive director, Exploration and Production. According to the minister, a new acreage allocation system will be put in place and the time frame for the allotees to explore or drop will be strictly monitored. “In addition, acreage sizes will be reduced and small players will be allowed to participate,” she said.

However, Alison-Madueke, noted as a big challenge the continued reluctance of the international oil companies, IOCs, to sincerely implement in-country capacity building to drive the local content implementation. “If after 50 years of operation in Nigeria, foreign companies are preferred to indigenous companies; it clearly shows that there is a problem. This has to change,” she said.

On host communities, she stated that their non-involvement in the oil and gas projects create distrust between the investors and the host communities because they are not originally involved. “The host communities must be carried along and seriously involved in the project from the beginning, and well planned corporate social responsibility activities must be put in place to avoid destruction of investors’ facilities and disruption of operations,” she added. The minister pledged to share ideas with other oil producing African nations so as to avoid the pitfalls that countries like Nigeria have had.

Part of that experience sharing will certainly be on the fight to get the PIB passed which the minister predicted would be passed by the last National Assembly but it did not happen. The PIB is coming more than 50 years’ operation of the oil and gas industry without set standards and levels of efficiency expected of a 21-century industry. The PIB is the roadmap which the federal government of Nigeria now has for the sector. It is the PIB which will usher in a new dawn in the sector.

The all-encompassing bill will streamline activities in the oil and gas sector and entrench transparency, accountability and good governance. The areas covered by the bill include good governance, transparency, revenues, small field development, modern acreage management, role of the NNPC, incorporated joint ventures, Nigerian content, host community/social responsibility and gas master plan. The National Assembly, which is expected to soon pass the bill will hold public hearing on it soon. The outcome of the public hearing will be used to fine tune the bill to meet the expectations of all the stakeholders in the sector.

Originally, the bill is the outcome of the report of the Oil and Gas Reform Implementation Committee, OGIC, which was reconstituted in 2007 by President Umaru Yar’Adua. The bill contains most of the legal requirements that will apply to the entire industry in the country.

The PIB combines 16 different Nigerian petroleum laws in a single transparent and coherent document. This is the first time that such a large scale consolidation has happened anywhere in the world, according to Rilwanu Lukmam, minister of petroleum resources.

Prior to the coming of the PIB, the main laws governing the sector are the Petroleum Act 1969, the Petroleum Profits Tax Act 1959 and the Nigerian Petroleum Corporation Act of 1977. These and practically every other law regulating the industry needed to be holistically updated to reflect the changing dynamics of the oil and gas industry worldwide.

Meanwhile, all eyes in the international oil and gas sector are on Nigeria to see the outcome of the long expected bill which will trigger more investment into the sector. Carlos Pascal, the special envoy and coordinator for International Energy Affairs, USA Department of State, said African countries should link oil and gas development with the development of energy and power. He said Nigeria occupies an important position in the African continent and called on other African Countries in the oil and gas business to look up to Nigeria and avoid their mistakes as well as emulate their successes in order to get it right. He added that the issue of security and kidnapping in African nations remained a big concern to the world and called on the African heads of state to come together and find a lasting solution to the problem.