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Oil production rises, Reps panel ends work on PIB


An oil field in the Niger Delta Photo: Getty Image

An oil field in the Niger Delta Photo: Getty Image

A PRODUCTION capacity of 205, 007 bpd from 130, 000 by the National Petroleum Development Company (NPDC) is one of the achievements of the oil industry, the minister, Mrs. Diezani Alison-Madueke, declared yesterday.

She also stated that the Ministry of Petroleum Resoources and its parastatals were focused on mitigating the effects of lower crude prices by directing efforts and investments towards the diversification of oil revenue base in 2015 and beyond.

And after two years of work on the Petroleum Industry Bill (PIB), a 23- member ad-hoc committee of the House of Representatives submitted a report on the proposed legislation yesterday at its plenary session presided by Speaker Aminu Waziri Tambuwal.

The House had in a resolution of November 15, 2012 constituted the Mohammed Isiaka Bawa-led committee to look into the bill and make recommendations on how or in what form to pass it into an Act that would provide for legal, fiscal and regulatory framework for the Nigerian oil and gas industry.

Yesterday, Bawa who briefed reporters at the end of the plenary session noted that the Bill, with recommendations on the 360 sections and annextures aimed, among others, to create a conducive business environment for petroleum operations; enhance exploitation and exploitation of oil resources in Nigeria for the benefit of Nigerian people, would surely be considered and passed into law when the House reconvenes on the 31st of this month.

Nevertheless, he disclosed that among recommendations by his committee on the PIB were the removal of the discretionary power of the President to grant petroleum licence and lease as contained in section 191 of the original bill.

Instead, he explained that the committee recommended competitive bidding for the award of such licences and leases adding that the rationale behind this amendment is simply to avoid the practice whereby power for the award of oil blocks was discretionary.

Meanwhile, the Senate yesterday approved the harmonised version of the 2015-2017 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
This followed the presentation of the Conference Report by the Committee on Finance headed by Senator Ahmed Makarfi.

He told the Senate that the Conference Committee adopted N190 per dollar exchange rate, $53 per barrel oil benchmark as well as a statutory transfer of $368 billion.

Makarfi said: “On the exchange rate, the Conference Committee adopted the Senate version which has N190 exchange rate to the dollar. On the oil price benchmark, whereas the Senate passed it on $52 per barrel, the House passed it on $54 per barrel. The Conference Committee agreed to recommend a benchmark of $53 per barrel.

“Item three is on Statutory Transfer, the Conference Committee adopted the House of Representatives version which reduced it from $411.85 billion to $368 billion.”

Senate President David Mark however raised concern over the adoption of $53per barrel by the committee which he said ought to have adopted either the benchmark passed by senators or that of House of Representatives.

He said: “The two conference teams have no right to do that. You either take one or the other. You either take the House version or the Senate version. You cannot set a new one; no you cannot.

The Senate however adopted the $53 per barrel as oil benchmark.

“I hope that with this, the appropriation committee will hasten the budget preparations,” Mark added.

In another development, the Deputy Director-General of Peoples Democratic Party (PDP), Presidential Campaign Organization, Professor Tunde Adeniran, yesterday berated the leadership of the ruling political grouping for allegedly refusing to market the achievements of President Goodluck Jonathan.
He spoke at a training workshop for trainers who would move to the Wards to train some 600,000 mobilized expected to  canvass support for the candidates of the party.

He lamented that the opposition had taken advantage of PDP’s failure in showcasing Jonathan’s achievements to misinform Nigerians about the performance of the administration.
Adeniran explained that the training session for the mobilizers became imperative to bridge the wide gap in disseminating information on the under-reported achievements of the President.

Speaking at the 2014 and 2015 budgets performance and defence presentation before the House’s Joint Committee on Petroleum Resources-Upstream, Downstream and Gas Resources, Mrs. Alison-Madueke stated that the ministry would expand its revenue frontiers by enhancing gas operations, expanding retail outlets and increasing refineries’ capacity utilization while at the same time minimizing the losses.

The Minister noted that 2014 was packed with several industry activities, the most apparent being the upsurge in divestment and acquisition transactions that are boosting the number of Nigerian upstream operations.

‘’However, the petroleum ministry still faced a number of challenges, such as pipeline vandalism, crude oil theft, declining crude oil prices, inadequate funding. Notwithstanding, with all hands on deck and the support of the National Assembly, the industry performed well in 2014,’’ Mrs. Alison-Madueke said.

She listed some of the achievements of the industry in 2014 to include: the increase in the production capacity of NPDC from 130, 000 barrels per day to 205, 007 bpd, the sustenance of crude oil production at an average of over 2.24million barrels per day in spite of all the attendant challenges of crude oil theft and pipeline vandalism, growing of NPDC into a mid-size exploration and production company and major gas supplier to the domestic market with over 600 Million Standard Cubic Feet of gas per day supplied through Oredo, Ughelli and Utorogu gas plant.

Also listed as achievements within the period are the enhancement of gas infrastructure through the addition of new Central Processing Facilities along critical gas pipelines, restructuring of the upstream gas sector by increasing the delivery price and transmission of gas with a view to boosting investment in the sector, collaboration with the Central Bank of Nigeria (CBN) to settle outstanding indebtedness of the Power Sector to upstream gas suppliers in order to ensure continuity of supply, boosting of gas supply to power with current ability to support 5, 800 MW of generating capacity with all completed power plants connected to permanent gas supply lines as well as the attainment of an average Gas Production of over 8.6 billion cubic feet of gas per day and over 7.6 bcfd utilization at the end of 2014.

She said that in 2014 the ministry through the Nigerian National Petroleum Corporation (NNPC) commenced the critical expansion and construction of major backbone infrastructure which led to the expansion of Escravos –Lagos pipeline to 2 billion cubic feet per day capacity, the East-West OB3 Pipeline as well as the Calabar-Ajaokuta-Kano Pipeline utilizing Eurobonds and IFC Funding.

“ Within the period we embarked on aggressive Gas infrastructure delivery which resulted in the completion of over 450km of gas pipeline, additional 377km pipeline construction is ongoing plus another 1, 400km at developmental stages expected to commence in 2015, ’’ she said.

In the downstream sub-sector, NNPC Retail increased operational stations from 432 in 2013 to 496 in 2014 while stability in the supply and distribution of petroleum products was achieved within the period.

She added: “After many years of being inoperable due to pipeline vandalism, we have upgraded many of the our pipelines and products Marketing Depots across the nation, namely: Port Harcourt-Aba product; Warri-Benin; Kaduna-Gusau; Suleja-Minna; Kaduna-Jos, Jos-Gombe, only last week, the Aba Enugu pipeline. All these depots are now fully operational and will enhance the stable supply of petroleum products across the country despite the challenges of vandalism.”

Bawa said the committee recommended that petroleum host community fund provided under section 116 of the original Bill be extended to benefit any community where oil facilities and installations such as pipelines, depots and refineries are located.

He explained that in the Bill was the inclusion of a new section 118 covering both upstream and downstream sectors adding the innovation is intended to allay the raging distrust between oil producing and non -producing communities in the country.

He also disclosed that 30 per cent of NNPC gas company shares are to be sold through public offering at the Nigerian stock exchange (NSE) as well as oil production measurement are to be made at the flow station not at the point of export were part of the recommendations.

The idea, he said was to curtail bunkering and oil theft which had bedevilled the oil sector over the years.

Justifying why the committee also upheld the sanctity of existing petroleum contracts, he said: “This is to allay the fears of the investors both foreign and local who feel threatened that a new petroleum law will terminate existing contracts for oil exploration and production.

“Thus, any license, lease, permit or other rights in respect of petroleum industry in Nigeria shall continue to be valid for the remainder of its duration as if it is issues under this Act.”

He also explained why in spite the fact his committee retained the conventional powers of the Minister under section 6 of the Bill, it had to go ahead to strip the petroleum Minister from exercising enormous powers.

Rationalising the decision, he said: “The powers conferred on the minister over the control of newly established agencies in the petroleum industry appear to be enormous and capable of undermining the independence of the regulatory agencies.

“Therefore, the committee in its wisdom has recommended the removal of powers given to the minister either to serve as chairman or to recommend to the president the appointment of chairmen of the boards of such agencies. The rationale behind the removal of ministerial powers is to ensure smooth running of the agencies without undue influence, and guarantee independence of the same, which is in line with current global practices.”

He disclosed that the agencies affected includes the National Oil company (NOA), upstream petroleum inspectorate agency, downstream petroleum regulatory agency, asset management corporation, and any other corporate entity established by the Act.

On environmental quality management, the committee retained environmental remediation funds which obligated petroleum investors to pay adequate compensation for the remediation of environmental damage.

According to him, the policy will at least reduce the environmental damages in the Niger Delta/oil producing communities, adding that the gas flaring punishment and penalty was retained under section 323 in order to minimise environmental hazard in such areas.

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