‘Independent oil firms avoid payment of royalties, taxes’
THE independent oil and gas companies may have been infringing on the nation’s petroleum regulations with the high level of defaults in payment of royalties and taxes on the operated oil fields.
The Department of Petroleum Resources (DPR), which revealed this at the ongoing Nigeria Oil and Gas Conference and Exhibition (NOG) in Abuja, yesterday, said the indigenous upstream operators have failed to perform their operational obligations, particularly in the areas of taxes and royalties.
The Director, DPR, George Osahan, who spoke on the growth of indigenous participation the sector, said the success story has not been significant but the DPR would continue to encourage them.
Osahan however noted that the indigenous contribution to national oil output stands at 10 per cent.
“It is expected that the independent oil firms should be contributing about 40 per cent to the country’s production, but they are currently producing about 10 per cent to national output,” he stated.
The DPR boss however expressed concerns that over 10 years after the last marginal field bid round, only about a third have developed their fields and commenced production.
Although, he was optimistic that the future is bright for the indigenous upstream operators, he urged that the operational rules such as payment of taxes, royalties are fulfilled.
“Many of the independent operators have not been paying taxes and royalties. This is worrisome, but the department is strategising on how to clampdown on them because we do not want to discourage them. Government is promoting local content and wants to do everything to encourage operators, but they must live to their responsibilities and pay royalties,” he said.
He noted that some of them have now found respite from the challenges of financing, as they took bold step to enlist with the Nigerian Stock Exchange.
Osahan also lauded the local financial sector for its support for the petroleum industry, encouraging the indigenous firms to further explore more opportunities of merger and acquisition.
Besides, he emphasised that they should acquire more advanced technologies in their quest for growth.
The Chief Executive Officer, Oando Plc, Wale Tinubu, said the marginal field policies and regulation in the country are archaic and uneconomical and this has largely impacted on the performance of the independents.
The Minister of Petroleum, Mrs Diezani-Alison Madueke had earlier at the conference, emphasised the need for both oil multinationals and indigenous operators to strategise for innovative funding in the wake of the recent plunge in crude oil prices.
She said: “Under a sustained low oil price, industry must challenge itself to raise funds for projects in order to meet these targets. This will call for radical changes in the cost environment, improved contract\project management and innovative financing mechanism.
“However, in the event of moderate oil prices recovery, we would still require innovative funding and greater private sector involvement across the hydrocarbon value chain.”
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