Nigeria's Federal Government to Discuss Petroleum Industry Bill (PIB) Concerns with Oil Majors

Thursday, April 15, 2010

Nigerian National Petroleum Corporation (NNPC)

•Effects 165 amendments on proposed law

By Chika Amanze-Nwachuku with agency reports

The Federal Government will hold talks with international energy companies to address their concerns over a proposed oil law, Petroleum Industry Bill (PIB), the Group Managing Director (GMD) of the Nigeria National Petroleum Corporation (NNPC), Mallam Shehu Ladan, has said.

"The door is not yet closed," Ladan told reporters yesterday in Lagos. "In the next couple of days we'll be able to sit down with all major oil companies and iron out finally those aspects of the bill that they have problems with."

The proposed law seeks to enhance more indigenous participation in the oil industry and change the way oil and gas industry is regulated and funded in the country.

But oil companies are saying the proposed fiscal regime makes it unprofitable to invest in deep water offshore in the country.
Ladan also said the Federal Government had effected a total of 165 amendments to the draft PIB in response to views expressed by International Oil Companies (IOCs), World Bank, Labour unions, Federal Inland Revenue Services (FIRS) and other industry stakeholders.

Presenting a paper titled: PIB and National Development at the 2010 Society of Petroleum Engineers Nigerian Council - Annual Oloibiri Lecture Series and Energy Forum, yesterday, the NNPC boss said the corporation was ready to accommodate further dialogue with stakeholders on the oil reform legislation.

He said that the government memorandum, which was submitted to both Chambers of the National Assembly, identified 14 critical gaps in the draft bill and sought to close those gaps with a plethora of amendments.

In closing these gaps, he said further interactions were held with various stakeholders - resulting in the modification of some aspects of the bill.

He said: “A total of 56 changes made to respond favourably to comments made by the petroleum industry through OPTS, 36 changes made to respond to Federal Inland Revenue Services, seven changes made to respond to World Bank/International Monetary Fund (IMF) concerns and 66 changes made to respond to other stakeholders including the labour unions.’’

The NNPC helmsman said despite the initial modifications, the corporation is still open to future dialogue on contentious issues especially the fiscal regime.

``Dialogue remains the only way out. You recall that this is not the first time we are having issues with the IOC’s. Recall the arguments that came during the setting up of the Nigerian Liquefied Natural Gas Project and at the end of the day, dialogue prevailed. So in the next couple of days we should be able to iron out the issues with our Joint Venture partners,’’ he said.

The GMD also expressed his commitment to pursuing the transformation programme of the NNPC while addressing the issues of gas shortage for power supply, ensuring integrity of the pipelines and uninterrupted supply of petroleum products throughout the country.

Meanwhile, contrary to NNPC’s claim that fuel importation has reduced following the revival of two of the country’s refineries, the Department of Petroleum Resources (DPR) has disclosed that Nigeria still imports virtually all its products because the refineries currently operate at only 18 per cent of their combined installed capacity of 445,000 barrels per day.

NNPC through its Group General Manager, Group Public Affairs Division, Dr. Levi Ajuonuma, had claimed last month that the Warri and Kaduna Refineries had commenced full operation.

Specifically, he said the Kaduna refinery has stabilised at 60 per cent capacity - producing Premium Motor Spirit (PMS), Dual Purpose Kerosene (DPK), Automotive Gas Oil (AGO) and Low Pour Fuel Oil (LPFO), while the Warri Refinery and Petrochemical Company (WRPC) came on stream after the re-inauguration of its vital units.

Ajuonuma, who did not disclose the actual daily output of the different petroleum products, however, noted that all the primary units of the Kaduna refinery were back on stream.
This, he said, would go a long way in reducing importation of petroleum products into the country by the NNPC and other importers.

But speaking at the first quarter briefing, the DPR Director, Mr. Billy Agha, said Nigeria is still importing petrol massively as the refineries in Warri, Kaduna and Port Harcourt still perform at only 18.72 per cent of their installed capacity.
Agha, who would not disclose the exact quantity of products imported or the amount government spends on importation, blamed the situation on equipment failure, lack of haulage for some products and intermediates and lack of feedstock.

He explained the old Port Harcourt Refinery has been shut down in preparation to the routine Turn around Maintenance (TAM).
Given the breakdown, he said, total crude received during the said period was 7,302,455 bbls, while total crude processed was 5,447,290bbls.

He said 40 development wells were drilled during the first quarter of 2010 as against 27 wells drilled during the same period of 2009.

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