Chief Timipre Sylva, Minister of State for Petroleum Resources, says the Petroleum Industry Bill (PIB), which is currently before the National Assembly, will address the issues relating to gas Production Sharing Contracts (PSC).
Sylva said this at a National Assembly Public Hearing on Monday in Abuja, which was organized by the Joint Committee on Gas Resources, Petroleum Resources, Upstream and Downstream.
The hearing was on the topic: “Inclusion of Gas Terms in Production Sharing Contracts by the Nigerian National Petroleum Corporation (NNPC).”
He claimed that issues relating to gas terms were not covered by the PSC, particularly in terms of the commercial aspect.
“ Issues on gas terms was not captured in the PSC because at the time, the offshore was just a frontier territory, today, it is no longer frontier, it is a proven territory.
“There have been a lot of discussions on how we can change the terms, I believe that most of these issues will be addressed in the PIB, especially the issues around gas terms which we all believe were not properly captured in the document.
“Already, the NNPC is engaging in a lot of discussions around the PSC, most of them are commercial discussion and they are bringing good progress.
“But of course, knowing that the PIB is in sight, and the National Assembly invited us for this, we felt that we are making progress and I believe that the PIB will be able to resolve some of the issues that will come up in the discussion,’’ Sylva said.
He explained that part of the reason gas was not included in the PSC was that it was not a primary subject of exploration at the time.
He believes that the new gas drive is essential for the country’s economic growth.
According to Sylva, the government launched the auto gas initiative in December 2020 and will soon launch a tax force to ensure that the initiative is fully implemented and that Nigerians use gas in their vehicles.
“In terms of domestic household usage, we are also pushing for penetration, especially in the rural areas. The general idea is to make sure that gas is pushed to the fore in Nigeria, ” he said
Sylva urged the National Assembly to follow through on its pledge to pass the PIB in April, which would aid the oil and gas sector’s and the country’s overall development.
Hon. Femi Gbajabiamila, Speaker of the House of Representatives, said in his remarks that the House resolved in November 2019 to take the requisite steps to achieve concentrated utilisation of abundant natural gas resources.
“To that end, the House appointed a joint committee made up of the committees on Gas Resources, Petroleum Resources (Downstream) and Petroleum Resources (Upstream) to engage with stakeholders, review statutes and make recommendations to the House of Representatives, and to the Federal Government.
“The Public Hearing we have gathered for today is an important part of the joint committee’s assignment.
“It is also an opportunity for stakeholders across the oil and gas sector and the country to present information, and contribute ideas that will help the joint committee arrive at the proper conclusions and propose effective solutions.
“This Public Hearing ought to have happened and the joint committee’s assignment should have been completed long before now. However, we had to adjust plans and make modifications to accommodate the new realities imposed due to the emergence of the COVID-19 pandemic,’’ he said
Nigeria’s natural gas wealth, according to the minister, had been treated almost as an afterthought in terms of policymaking as well as investment and exploration.
“Given the potential of natural gas for industrialisation, job creation and revenue generation for government, this is a significant error that ought to be corrected with all urgency,” he added.
Malam Mele Kyari, NNPC’s Group Managing Director, also stated that the 1993 PSC was designed around the award of crude oil, which is why the framework for gas was weak.
According to Kyari, an adequate proposal had been made in the current PIB to catch all that was needed in terms of gas.
He said that the country’s non-associated gas needed a different fiscal response than the associated gas.
According to him, the PSC must have a strong fiscal climate and a pricing system in order to function.
In his remarks, the Committee’s Lead Chairman, Hon. Nicholas Mutu, stated that the committee’s priority would be on ensuring that Nigerians profit from a large gas deposit.
According to Mutu, a revision of contract terms to account for cost is needed to ensure that gas is used for economic growth.
SOURCE: THE GUARDIAN
