Kunle Aderinokun in Abuja and Ejiofor Alike With Agency Report
9 January 2009
Lagos — The need to separate the running of Nigeria's oil and gas industry from politics is a major reason behind the reforms about to be embarked upon by the Federal Government, THISDAY was told yesterday.
The industry has always been perceived as a huge factory of corruption with political patronage being the major motive behind every decision, but this and other problems are expected to be addressed by the Petroleum Industry Bill which has been sent to the National Assembly.
The award of oil blocks and refinery maintenance contracts, among others, are believed to have been heavily politicised, thereby stunting the growth of the industry despite over 50 years of operations.
The reform bill, which is a brainchild of the Oil and Gas Sector Reforms Implementation Committee (OGIC), was approved by the Federal Executive Council (FEC) last September.
The legislation seeks, among others, to establish the Nigerian Petroleum Directorate (NPD), which shall function in the main as the secretariat of the Minister and shall take over any functions, which were previously undertaken by the Ministry of Petroleum Resources.
It also seeks to establish the Nigerian Petroleum Inspectorate (NPI), which shall be successor to the assets and liabilities of the Petroleum Inspectorate of the Nigerian National Petroleum Corporation and the Department of Petroleum Resources of the Ministry of Petroleum Resources.
It further proposes the establishment of the National Petroleum Assets Management Agency, which "shall be in charge of monitoring and approving costs of ventures in which Nigeria has investments or participating interests, with the objective of maximising the total revenue accruing to the government from the upstream petroleum industry in Nigeria," and "ensure that all operating contractual arrangements in the upstream, including but not limited to joint operating agreements, production sharing contracts, and service contracts, achieve the objective of realising or achieving optimal financial returns."
Significantly, the bill proposes the incorporation of the National Petroleum National Oil Company, which "shall be the holding company and successor to the assets and liabilities of the Nigerian National Petroleum Company of Nigeria (NNPC)".
Chairman, OGIC Sub-Committee on Policy Framework, Dr. Mohammed M. Ibrahim, in an exclusive interview with THISDAY in Abuja yesterday, said once passed into law and fully implemented, it would have a "seismic impact" on the oil and gas industry.
Essentially, Ibrahim said, the oil and gas bill was "transformative" and would have an impact of heightening proportion in the way the business of hydrocarbon is carried out and done in Nigeria.
"We discovered that, there are four factors that are responsible for the disrepair state of the Nigerian oil and gas industry and these are what this bill has come to address.
"Number one, we discovered that, there is lack of designation of functions and responsibilities in the Nigerian oil and gas sector - there was no clear separation of the policy framework for the Nigerian oil and gas industry, a complete absence of a clear cut policy for the Nigeria hydrocarbon industry.
"Secondly, we discovered there was political interference in the function and functioning of the various institutions in the Nigerian oil and gas industry.
"Similarly, we discovered lack of capacity by the operators of the Nigerian oil and gas industry.
"We also discovered a complete severance between the oil and gas industry and the larger economy in which case the Nigerian oil and gas industry has not served as a catalyst to developing the Nigerian economy as a whole which will now transform into socio-economic benefits to the Nigerian masses," he said.
Ibrahim, who was the Special Assistant on Petroleum to the former Head of State, General Abdulsalami Abubakar, and oldest member of OGIC, revealed that if the bill is passed into law, for the first time in the history of the country, there will be a clear-cut policy for the oil and gas industry.
He said: "The oil and gas sector implementation committee bill report is holistic, and it is for the transformation for the entire Nigerian hydrocarbon industry. It is a bill that is a product of almost a decade of hard work that has carried stakeholders in the industry along. It is a bill that is a product of holistic and audit of serious hydrocarbon terrain all over the world."
Elsewhere, there was some good news from Shell yesterday as it said it had lifted the force majeure on its crude oil exports declared last year after attacks on its facilities and quota cuts imposed by the Organisation of Petroleum Exporting Countries (OPEC).
The oil giant said the measures - which had affected all of its export programmes from Nigeria and were declared in July and October last year - had been lifted with effect from 1700 GMT on January 7.
The first force majeure was declared by Shell Petroleum Development Company (SPDC), in July 2008 as a result of attacks on facilities and pipelines while the second declaration was in October 2008 by SPDC and Shell Nigeria Exploration and Production Company (SNEPCo) as a result of OPEC cuts.
"The force majeures have been lifted because the associated commercial obligations for crude oil offtakes have been met," the company said in a statement, without giving details of the volume of crude oil involved.
"We are continuing with repairs of damaged facilities and recovering production. We are unable to provide any details, said a Shell spokeswoman.
However, THISDAY gathered that the oil giant declared force majeure on about 164,000 barrels of Bonny Light crude production, or about 40 per cent of the oil major's equity oil output in the country, by the middle of last year.
"Repair works are going on and it is making some progress. But some affected areas are more difficult to access for security reasons so it cannot be done in one day or another. We cannot give a specific time frame when repair works will be done," Shell had said in a statement.
Shell warned in October 2008 that it would not be able to meet all of its Nigerian supply obligations in November and December following a decision by OPEC to reduce exports.
As an OPEC member, Nigeria was bound by the decision, which Shell said at the time affected all of its offtake programmes, which include Bonga, Bonny Light and Forcados.
Shell's Bonny Light output had already been under an indefinite force majeure declared in July due to underproduction caused by repeated sabotage attacks against oil pipelines and facilities in the restive Niger Delta region.
That measure was also lifted on Wednesday, Shell said, although the firm gave no production details.
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