Page 4 - DMEA Week 39

DMEA COMMENTARY DMEA

Details of PIB emerge

Nigeria’s proposed oil law reportedly calls for privatising NNPC, amending the royalty
regime and changing the line-up of state agencies overseeing the hydrocarbon sector

NIGERIA NIGERIA’S federal government has not talked corporation capable of operating as a commer-
much about the details of its Petroleum Industry cial entity with no access to government funds.
WHAT: Bill (PIB), the long-awaited oil and gas law that It states that Nigeria’s Ministries of Finance and
The PIB has mostly been was finally submitted to the National Assembly Petroleum Resources will transfer NNPC’s assets
kept under wraps, but in August. to the new firm and then pay in cash for shares in
some details are coming Earlier this week, though, Reuters said that the NOC’s replacement.
to light. it had viewed a copy of the bill. And if the news Officials in Abuja hope that the changes
agency’s report is accurate, Nigeria’s hydrocar- will help the company raise the funds it needs
WHY: bon sector is headed for some major changes. for new exploration and development projects,
The legislation lays the According to Reuters, the PIB lays the Reuters commented.
groundwork for some groundwork for reform on multiple fronts.
major changes. First, it provides for the privatisation of Nigerian Royalty regime
National Petroleum Corp. (NNPC), the gov- As for deepwater royalties, the PIB serves to
WHAT NEXT: ernment-owned national oil company (NOC). amend the Deep Offshore and Inland Basin Pro-
The National Assembly Next, it revises the deepwater royalty regime duction-Sharing Contract Act. It raises the floor
has a good chance adopted last year. Additionally, it changes the for royalty payments, stipulating that developers’
of passing the bill line-up of state agencies responsible for oversee- obligation to pay kicks in when crude prices top
and sending it to the ing oil and gas operations. $50 per barrel, up from the previous level of $35
president for signature per barrel. It also cuts the royalty rate for offshore
before the end of the year. Privatisation of NNPC sites yielding less than 15,000 barrels per day
With respect to the divestment of NNPC, the (bpd) from 10% to 7.5%.
PIB calls for the creation of a limited liability These changes may make the royalty regime

P4 www. NEWSBASE .com Week 39 01•October•2020