17 Years After, Senate Passes Petroleum Industry Bill


The Senate yesterday passed the first part of the Petroleum Industry Governance Bill (PIGB), a modified version of the much anticipated Petroleum Industry Bill (PIB), after 17 years of consideration.
The passage of the PIGB, which is just a quarter of the four components of the Petroleum Industry Bill (PIB), followed the final consideration and adoption of the report of the Senate joint committee on petroleum (upstream, downstream and gas).
According to chairman of the committee, Senator Tayo  Alasoadura (APC-Ondo) who presented the report at the plenary, the Senate had to split the PIB into parts for expeditious consideration and passage.
He said, ‘‘This was why the senate decided to consider the first part namely the ‘Petroleum Industry Governance Bill 2017’ first. The other parts which shall arrive the Senate in due course include Bills on ‘Upstream Petroleum License and Lease Administration’; ‘Downstream Oil and Gas Administration’; ‘Petroleum Fiscal’ and  ‘Petroleum Revenue Management including Petroleum Host Community Fund (PHCF)”, he said.
After a clause-by-clause consideration, with few amendments, the Senate approved the bill to establish a legal framework for the creation of a more efficient, transparent, competitive and internationalized petroleum industry.
The Bill seeks to create a conducive business environment for the operations of the petroleum industry and overhaul the Nigerian National Petroleum Corporation (NNPC).
The bill, if eventually passed by the House of Representatives and signed by the president into law, will lead to unbundling and restructuring of the Nigeria National Petroleum Corporation (NNPC) and the Department for Petroleum Resources, DPR and also create new agencies with more responsibilities.
The new ones that will be established are the National Oil Company (NOC) and National Petroleum Assets Management Commission (NPAMC).
The NOC, as proposed in the bill, will be an “integrated oil and gas company operating as a fully commercial entity and will run like a private company”, while the NPAMC will be a “single petroleum regulatory commission which will focus mainly on regulating the industry”.
The commission will also have responsibility for health and safety regulations in the industry, while collaborating with the Ministry of Environment on environmental issues.
The ministry, currently overseeing the Ogoni cleanup programme, will be represented on the board of the commission.
Explaining the bill further, Senator Alasoadura said, “Our report proposes a slim, focused yet robust framework for effective institutional governance of the Nigeria Petroleum industry. We supported and enhanced the creation of an independent one-stop-shop regulatory agency which will absorb the present Department of Petroleum Resources (DPR), Petroleum Product Pricing Regulatory Agency (PPPRA) and the Petroleum Equalization Fund (PEF) into one agency.
“We have streamlined and sharpened the role of the Minister. We have also enhanced the extensive reform of NNPC into two limited liability companies- the National Petroleum Company and Nigeria Petroleum Assets Management Company to ensure efficient and effective commercial performance.
“In carrying out our assignment we have ensured that the major lapses associated with prior institutional frameworks have been remedied”.
The Bill also made provisions for funding the NPRC as stated in its section 26 that “The commission shall establish and maintain a fund (‘The Fund’) from which all expenditures incurred by the commission shall be defrayed.
The NPRC is also empowered by the bill to spend ten per cent of what it generates for its operations.
The bill seeks to open up the sector to more and better business opportunities, make the sector more transparent and ensure better accountability of revenue derived from oil.
It also pushes for a more inclusive development away from crude oil to other product lines and by-products and robust engagement between international oil companies, IOCs and the government in the area of investment and modifications in the Joint Venture Partnerships, JVPs/cash call obligations.
Similarly, the bill advocates the activation and extension of indigenous participation and local content development, just and fair engagement of the oil producing communities and transparency/accountability in the industry.
In his remarks after the passage of the bill, the Senate President, Bukola Saraki commended the commitment of his colleagues in passing the bill after 17 years.
“I congratulate the 8th Senate with the passage of this landmark bill which has not been passed for many years”, he said, adding that “this Bill is not only for Nigerians but for our investors. We are proud of what has been done”.
Saraki had after inauguration of the 8th Senate in 2015 promised to, among other things, deliver the Petroleum Industry Bill as well as making laws that would better the lot of Nigerian businesses
The bill was broken into four parts to allow for easier passage as it has suffered prolonged debate in the upper legislative chambers.
The new bill which now awaits the assent of the president will lead to the unbundling of the Nigeria National Petroleum Corporation (NNPC) into two companies namely Nigeria Petroleum Assets Management Company and the National Petroleum Company.
The two companies, according to the bill, shall be supervised by the Ministry of Petroleum Incorporated.
The bill provides that “the Minister shall, within six months after the Effective Date, take such steps as are necessary under the Companies and Allied Matters Act to incorporate two entities – the first may be called the Nigeria Petroleum Assets Management Company, or such other name as may be available and the other may be called the National Petroleum Company, or such other name as may be available, as companies limited by shares, which shall be vested with certain assets and liabilities of the Nigerian National Petroleum Corporation (NNPC).
“Upon incorporation and the transfer of assets pursuant to this Act: the Nigeria Petroleum Assets Management Company (hereinafter called the Management Company in this Act) shall be responsible for the management of assets currently held by the Nigeria National Petroleum Corporation (NNPC) under the Production Sharing Contracts and Back-in Right Provisions under the Petroleum Act 1969 as amended.
“The National Petroleum Company shall be responsible for the management of all other assets held by NNPC except the Production Sharing Contract and Back-in Right assets currently held by the NNPC;
“At the time of its incorporation, the initial shares of the National Petroleum Assets Management Company shall be held in the ratio of 20% by the Bureau for Public Enterprises, 40% by the Ministry of Finance Incorporated and 40% by the Ministry of Petroleum Incorporated on behalf of the Government”.
Prior to this development the Bill has gone through 5 sessions of the National Assembly beginning from the 4th Assembly which was inaugurated in 1999 under former President Olusegun Obasanjo.
Attempt to pass the bill by the 7th Senate presided over by Sen. David Mark met with a lot of controversy and rejection of certain clauses in the bill, which forced the Senate then to drop the bill at the point of passage.
Meanwhile, Nigeria yesterday in Vienna secured another exception of crude oil production cuts from the Organization of Petroleum Exporting Countries (OPEC).
OPEC also agreed to further extend cuts in oil output by nine months to March 2018 as a strategy to battle a global glut of crude.
The exception which was also extended to Libya came as both countries were said to continue to face unrest.
OPEC agreed to keep its own cuts of around 1.2 million bpd in place for nine months, Kuwaiti Oil Minister Essam al-Marzouq told newsmen in Vienna.
He also said Saudi oil exports were set to decline steeply from June, thus helping to speed up market rebalancing.
He revealed that OPEC oil ministers were continuing their discussions with non-OPEC producers, stressing that the proposal for joint cuts was also around 1.8 million bpd, which would see non-OPEC producers cut under 600,000 bpd.
OPEC had in December 2016, agreed its first production cuts in a decade and the first joint cuts with non-OPEC producer nations led by Russia in 15 years.
The two sides decided to remove about 1.8 million barrels per day (bpd) from the market in the first half of 2017 – equal to 2 per cent of global production.
It is expected that the new extension will also be carried out once again in tandem with a dozen non-members led by top oil producer, Russia, which reduced output with OPEC from January.
The January cuts had helped to push oil back above $50 a barrel this year, giving a fiscal boost to producers, many of which rely heavily on energy revenues and have had to burn through foreign-currency reserves to plug holes in their budgets.
The price rise this year has spurred growth in the U.S. shale industry, which is not participating in the output deal, thus slowing the market’s rebalancing with global crude stocks still near record highs.
Prior to the decision to exempt Nigeria, the Minister of State for Petroleum Resources, Dr. Emmanuel Kachikwu, told journalists that Nigeria was not opposed to joining OPEC production caps but would have to wait and see if production came back to acceptable levels.
Meanwhile there are reports that a gas pipeline operated by the Nigerian Gas Company, a subsidiary of the Nigerian National Petroleum Corporation (NNPC), has been attacked close to the oil hub of Warri by suspected rebels.
The attack comes after months of truce in Nigeria, during which the country’s government and Niger Delta leaders had been in negotiations.
An effort to reach NNPC’s Spokesperson was unsuccessful, as he was said to be in an official engagement and could not respond to phone calls at the time of the report.
But agency report said the Spokesperson for Nigeria Gas Company, Violin Antaih, commented: “It has been confirmed, even by the community people, that it was a third-party sabotage.
“If you have a picture of the blast, you will know too well that was exactly what happened because the pipeline was cut into two. A ruptured pipeline will not have such effect”, Antaih added.

It Will Sanitise The Sector – Oil Workers
Meanwhile, NUPENG and PENGASSSAN have commended the Nigerian Senate over the passage of the Petroleum Industry Governance Bill (PIGB) 2016 after 17 years of waiting.
The unions described the passage of the bill as a milestone achievement, especially when it is considered that the PIGB is not an Executive Bill.
In a statement signed by Comrade Hyginus Chika Onuegbu, chairman, NUPENG and PENGASSAN joint national committee on the PUB, both unions however observed that, while the passage of the PIGB is commendable, it  will not deliver the full benefits of the intended reforms except if the other aspects of the PIB are also legislated
The statement reads in part: “Nigeria has lost over Nm$235 billion due to its inability to pass the Petroleum Industry Bill into law since the reform in the Nigerian Petroleum industry was kick-started 17 years ago.
“We therefore look forward to the concurrent passage of the Petroleum Industry Governance Bill (PIGB) into law by the Federal House of Representatives and also eventual accent by the President of Nigeria.
“We however note that the PIGB only deals with the one aspect of the PIB, that is the governance and institutional framework of the Nigerian Petroleum industry. We therefore look forward to the passage of the other aspect of the Petroleum Industry Bill(PIB) namely,      the Petroleum Fiscal Framework Bill; the Petroleum Industry Downstream Administration Bill; the Petroleum Industry Revenue Management Framework Bill and the Petroleum Host Community Bill.”

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