Page 4 - AfrOil Week 32 2021

AfrOil COMMENTARY AfrOil
PIB seen providing support to Nigeria’s “Decade of Gas”
The new oil and gas law aims to address foreign investors concerns about contracts, transparency and other matters, but it also establishes incentives for delivering gas to the domestic market
(Image: DPR)
WHAT:
Abuja drew up the PIB partly because it needed to address foreign investors’ concerns about contracts, transparency, risk and other issues.
WHY:
The bill also includes provisions that will
offer support to domestic gasification plans.
WHAT NEXT:
These provisions do not guarantee success for “The Decade of Gas.”
WHEN Nigerian President Muhammadu Buhari launched a major push for the passage and adoption of a new petroleum law last year, he had multiple reasons to do so.
One of the most important of these was the need to address the concerns that international oil companies (IOCs) had expressed about Nigeria.
These IOCs, including long-time investors such as Eni (Italy) and Royal Dutch Shell (UK/ Netherlands) were worried about the country’s commitment to improving transparency and ensuring the stability of contracts. They fret- ted about the progress of efforts to deter cor- ruption, about the risks of working in onshore areas populated by communities at odds with the federal government, about investments in infrastructure and about other issues. They did so frequently enough and loudly enough that industry observers started warning that Nigeria might lose investment to other countries unless it took action.
The Buhari administration certainly heeded that warning. It submitted the Petroleum Indus- try Bill (PIB) to both houses of the National Assembly in August 2020 and finally succeeded in securing the passage of the legislation in the third reading in mid-July of this year. The bill is now due to be submitted to Buhari, and the
president is expected to sign it into law in the near future.
This has the potential to be good news for IOCs working in Nigeria (or hoping to do so), though it will take time to determine whether the PIB lives up to its promise. But it may also give a boost to Nigeria’s domestic fuel and energy sector, in the form of support for domes- tic gasification initiatives.
Another ambitious initiative
Buhari has voiced strong support for plans to promote the development of the country’s domestic natural and associated gas resources.
In late 2019, he declared that the time had come to focus on gas, asserting that Nigeria was not an oil-producing state but rather a gas- rich state that also happened to produce oil. He declared 2020 “The Year of Gas” and touted his administration’s support for a number of ambi- tious initiatives, including the construction of the Ajaokuta-Kaduna-Kano (AKK) pipeline, a domestic gas supply link, and the building of a seventh production train for the Nigeria LNG (NLNG) consortium.
This initiative did not live up to its full poten- tial, largely because of economic and logistical disruption stemming from the coronavirus (COVID-19) pandemic.
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w w w . N E W S B A S E . c o m Week 32 11•August•2021