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Stakeholders seek enforcement of asset optimisation clause in PIB

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Director/CEO DPR, Engr. Sarki Auwalu


To avoid situations where oil assets are left idle without necessary contributions to the federation account, stakeholders have charged the Federal Government to enforce the drill or drop clause in the Petroleum Industry Bill (PIB).

According to them, this would help the country realise the accruable benefits from oil assets leased to operators, rather than such assets being left idle and dormant.

While speaking on the diminishing status of oil and gas in the global energy requirements in the next 20 years, industry professionals and advocacy groups are, in separate interviews, charging the Federal Government, federal lawmakers, interest groups, operators and other industry stakeholders to wrap-up the Petroleum Industry Bill (PIB) for presidential assent so that the country can have a new governing law that will improve investment, increase production, efficiency and transparency in Oil and Gas industry

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On the current controversy trailing the revocation of some marginal oil fields’ licenses by the Department of Petroleum Resources (DPR) and the petition to the House of Representatives Committee on Public Petition by Eurafric Energy Limited, one of the affected lease operators, Mr. Ademola Adigun, an oil sector governance reform expert, said that the issue has become a test case why the PIB must be quickly signed into law because the ‘Drill or Drop’ provision in the law will prevent process abuse and usurpation of regulatory responsibilities or powers.

Adigun decried a situation where oil companies sit on mining leases for years without getting them into production capacity as ‘wasteful and unproductive’ for a country that is facing severe revenue challenges.

“The country is under heavy borrowing to meet its developmental needs. So, the Nigerian government must do all it can to use the country’s oil and gas assets to build an economy of the future”, he added.

He said: “One of the greatest things that has happened, which is in the PIB, is the idea of ‘Drill or Drop’. We have had a history. I think the first attempt to Nigerianise the oil and gas sector was in 1990 when the Babangida government awarded oil blocks to some Nigerians who were thought to have financial capabilities to make the necessary investments. Of the award, only about three or four have been mined, that is Famfa, Conoil and some other two.

“Now, a lot of people get these licenses or win these bids then go sell it off. They sell it to those who lack capacity and the whole thing stalls and we suffer as a country. We have two problems in the sector right now; we have a declining take from the barrel and declining returns from crude. Now, we are limited to 1.45 million barrels a day by OPEC quota and unable to ramp up 2.1 million barrels per day.

“If the oil blocs lie fallow and people are not producing from them, we are losing revenue from the field, we are losing job creation opportunities, we are losing what should be the contribution to the GDP as well as field development fee. It is a whole basket of having something you cannot use. It is therefore better you drop it for other companies with capacity to explore.

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On what DPR must do to the new marginal fields awardees, who fail to get the blocs into production with a timeframe specified by the regulator, Adigun noted that the PIB has addressed that, adding that it is one of the reasons politicians and individuals with vested interests must put national interests above personal and sectional interests and allow the PIB to be signed into law after almost 20 years of the country’s struggle to get a more progressive law that addresses the problems facing the oil and gas industry.

The Immediate past Chairman, Society of Petroleum Engineers, Joe Nwakwe, said that there is a clear distinction between regulation and governance, calling for caution in a bid not to send a wrong signal to investors because of interference with regulation.

“I have not seen the comment by the House of Reps, what I suspect is that they may be pointing the DPR attention to the court case over the matter. But, it is clear that the Petroleum Act gives the power to award and revoke oil blocks to the Minister of Petroleum Resources and that power has been delegated to the DPR in this matter,” he said.

His view was corroborated by Adebayo Alamutu who maintained that the House of Representatives Committee on Petition may be doing more harm to the nation’s economy and reputation before the investors with its usurpation of power that does not belong to it.

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“First, there is no controversy in this matter. The minister has delegated the power to award and revoke oil blocks to the DPR, which is the regulator. The DPR on the other hand has said that it revoked the Dawes oilfields from Eurafric, Tako and Petralon 54 JV over lack of competence and needless rendering of national assets unproductive for many years.

“Now it has, in the best interest of the country, awarded the oilfield to a company it considered competent to make the field viable by generating revenues for Nigeria, and the House of Representatives will now reverse this? It is not only against the dictates of the Petroleum Act, it is against development. It is so dangerous to what we preach as a country on division of power. It will be so scary for the investors,” he said.

Meanwhile, Eurafric Energy Limited has debunked claims regarding the revocation of the Dawes Island marginal field and the decision to award the same to Petralon 54.

Eurafric disclosed that there is no pending court case on this matter, nor is the delegation of authority an issue, adding it had produced over 62,000 barrels of crude at the time of the revocation.

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Ademola AdigunDPRPIB
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