Page 5 - DMEA Week 39

DMEA COMMENTARY DMEA

Nigerian President
Muhammadu Buhari
submitted the bill..

more palatable to international oil compa- the end of the year. However, the legislation still
nies (IOCs) working at Nigerian fields. Abu- has several hurdles to surmount.
ja’s adoption of the Deep Offshore and Inland Two of those hurdles are structural in nature.
Basin Production-Sharing Contract Act last Buhari’s administration finalised its first draft of
year sparked a certain amount of controversy, the PIB earlier this year, and the Federal Min-
with some industry observers describing the istry of Petroleum Resources submitted it to
measure as a revenue grab. Others – including the House of Representatives, the lower house
Ed Hobey-Hamsher, a senior Africa analyst at of Parliament, in August. According to press
Verisk Maplecroft – predicted that the new reg- reports, the bill was then submitted to the upper
ulations would backfire in the end by discour- house, the Senate, in September. Both of these
aging IOCs from renewing or expanding their houses must sign off on the PIB before it can be
Nigerian operations. sent to the president for signature, and as of press
time, neither had done so.
Regulatory line-up In other words, the legislation is still under
With respect to agencies, the PIB aims to elim- discussion. Indeed, sources familiar with the
inate, reconfigure and/or replace at least three matter told Reuters last week that the National
state bodies overseeing various aspects of the Assembly had set up several special teams to
hydrocarbon sector. One of these is the Depart- review individual sections of the bill.
ment of Petroleum Resources (DPR), which is The sources did not say whether any of these
responsible for ensuring compliance with laws, teams were considering amending the bill. The-
regulations and guidelines that apply to the oil oretically, though, the final version of the PIB
and gas industry. The DPR will see most of its may differ in some respects from the first draft
tasks reassigned to a new commission, Reuters submitted in August. Reuters noted, though, that
said. both chambers of Parliament were dominated
Also on the chopping block are the Petroleum by Buhari’s All Progressives Congress Party. As
Products Pricing Regulatory Agency (PPPRA), such, the bill has a good chance of being passed
which sets prices for refined fuels and monitors without any major changes and in good time.
and regulates fuel supply and distribution. Addi- If so, Nigeria will have passed a new oil law
tionally, Abuja will scrap the Petroleum Equali- after more than 20 years of discussions, argu-
sation Fund (PEF), which uses cash distribution ments and dead ends. Hopefully, the PIB will be
to keep motor fuel prices uniform all over the up to the challenges the country is now facing,
country, and transfer any remaining funds to a such as relatively low crude oil prices, uncertain
new agency that will help cover the cost of build- demand, environmental concerns and domestic
ing new natural gas infrastructure. gasification initiatives.
In short, the federal government appears to For his part, Timipre Sylva, the Minister of
hope that the restructuring will lead to positive State for Petroleum, told members of the Senate
changes in the midstream gas transport sector, as on September 28 that he hoped the legislation
well as the downstream fuel sector. would pass quickly. If Nigeria delays further,
he said, it may not be able to make the most of
The path to final approval its oil reserves. Since global oil consumption is
Nigerian President Muhammadu Buhari has slated to decline by 50% over the next 20 years,
said he hopes to see the National Assembly pass the country ought to sell its crude while demand
the PIB in time for him to sign it into law before remains at current levels.™

Week 39 01•October•2020 www. NEWSBASE .com P5