Page 17 - AfrOil Annual Review 2021

AfrOil JULY AfrOil

Finally, late last month, members of both cham- His complaints have been echoed by a number
bers pledged to wrap up discussion and pass the of public figures, including representatives of
bill before their annual recess began on July 16. host communities in the states of Abia, Ondo,
And this time they succeeded. On July 1, the Edo and Delta and the governors of several
PIB passed in the third reading in both the Sen- southern states, according to the Nigerian press.
ate and the House of Representatives. Then on Meanwhile, other observers have offered a
July 6, the Senate set up a conference committee more measured response. Obo Idornigie, the
to harmonise the two chambers’ versions of the vice-president of sub-Saharan African research
bill. Once the committee finishes its work, the for Welligence Energy Analytics, told AfrOil by
PIB can be sent to Buhari, who is expected to email earlier this week that it would take time to
sign it in the near future. assess the new law’s impact on Nigeria and on
foreign investors as well. “We expect investors,
Enthusiastic reception particularly the incumbents in joint venture
This success has drawn a great deal of positive partnerships with NNPC [Nigerian National
attention from the African Energy Chamber Petroleum Corp.], to wait and see how the law
(AEC), an industry association formed to pro- unfolds before committing to new joint ven-
mote the development of the continent’s oil and ture projects,” he wrote, adding: “NNPC’s joint
gas resources. venture partnerships with the IOCs cover the
In a statement dated July 1, the chamber said onshore and shallow-water sector.”
that the passage of the bill would benefit Nigeria One point of interest will be the fate of deep-
financially, economically, politically and dip- water offshore projects, he commented. “In the
lomatically. “By ensuring an enabling environ- deepwater sector, some of the majors have been
ment for investors backed by a transparent and negotiating licence extensions on their deepwa-
strengthened regulatory framework, the PIB will ter PSCs [production-sharing contracts],” he
present significant investment opportunities for noted. “The PIB permits ongoing negotiations
both regional and international stakeholders,” it on contracts to continue provided such con-
commented. “At a time when the global energy tracts are signed within one year of the effective
sector is particularly competitive for foreign date. The extension of these deepwater licences
capital, the passing of the PIB serves to elevate under reasonable terms will pave the way for
Nigeria as an energy leader on the global stage.” operators to sanction deepwater projects that
NJ Ayuk, the AEC’s executive chairman, have been in the pipeline.”
spoke enthusiastically about the PIB, describing On July 1, the
it as a long-awaited milestone. “For 13 years, our NNPC’s fate (and other issues)
oil and natural gas industry pushed and waited Analysts should also pay attention to the unfold- PIB passed in the
for this moment. Passing the Petroleum Indus- ing of plans for the restructuring of NNPC into a third reading in
try Bill lays the foundation for a stronger, effi- corporation that does not receive direct govern-
cient and attractive energy industry in Nigeria,” ment funding, Idornigie added. “The details on both the House of
he remarked. how the new NNPC structure will work – par-
Ayuk also predicted that the West African ticularly, [on] how all outstanding liabilities will Representatives
country would soon reap the benefits of the new be paid – will be of interest,” he said.
law. “What we must do is make this legislation When asked whether the restructuring and the Senate
work for Nigerian companies and foreign com- would make NNPC a more effective partner
panies in the energy sector,” he said. “I believe for IOCs, he responded by noting that “NNPC’s
that this bill will make the Nigerian energy sec- payment of its share of project funding through
tor competitive again and you will see rig counts the government has been a huge obstacle and
go up. Nigeria will out-innovate, out-produce has resulted in the IOCs carrying NNPC’s
and out-compete those who counted out or bet costs over the years for a number of big-ticket
against its oil and natural gas industry.” projects.”
Ian Simm, principal advisor at consultancy He continued: “If NNPC is run as a pure
IGM Energy, also struck an upbeat note. “This commercial entity with no interference from the
time around, there are signs that the PIB might government and can pay its cash calls, it should
stick, and with growing the pressure on listed be an effective partner. But to get the full support
companies to comply with more stringent reg- from its JV partners, the new entity will need to
ulations, it could be make or break for Abuja,” lay out a plan on how it will manage all outstand-
he told AfrOil. ing liabilities.”
Additionally, he pointed to the provisions of
Criticism – and a measured response the PIB that called for the establishment of new
Some observers have been far more critical. For state agencies to regulate upstream, midstream
example, Chief Edwin Clark, the national leader and downstream operations in the oil and gas
of the Pan-Niger Delta Forum (PANDEF), has sector. “A key concern for operators is [whether]
denounced the PIB’s provisions covering host the creation of new regulatory agencies (one for
communities’ allotment of oil and gas revenues. upstream and another for midstream/down-
In an open letter to Lawan and other prom- stream) will increase the bureaucratic process
inent legislators, he described the decision to for getting approvals and extend project cycle
offer host communities a 3% or 5% share of time,” he told AfrOil. “This will be a bigger con-
operating expenditures as “satanic and unjust” cern for operators looking at integrated projects
and called for the number to be raised to 10%. across the oil and gas value chain.” ™

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