Alison-Madueke: FG to Hold Oil Licensing Round This Year

James Emejo.THISDAY LIVE.December  5,2012

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Petroleum Minister, Dizeani Alison Madueke

  Nigeria continues to set its sights on holding an oil licensing round for marginal fields before the end of this year, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has said.

“We sincerely hope to have a new round this year, for marginal fields,” Alison-Madueke said on the sidelines of the annual Nigerian Economic Summit in Abuja yesterday, but declined to speak further, reported Reuters.

Last October, the minister had said the government planned to hold bid rounds for major and marginal fields before the year is up, but it is uncertain if there would be enough time to hold the tenders before the year runs out.

She is also in licence renewal talks with Royal Dutch Shell and Chevron over existing onshore fields, after ExxonMobil signed a renewal earlier this year.

The minister added that the Federal Government was in talks with international oil companies (IOCs) and local oil and gas companies to reach an agreement on fiscal terms proposed in the Petroleum Industry Bill (PIB).

“There’s always the intent to try and strike a balance, particularly from the side of government,” she said, noting that there “seemed to be such disparity in terms of where we stood on the fiscals.”

The PIB is a comprehensive legislation aimed at instituting reforms in the oil and gas sector and increasing the country’s share of profits from oil pumped off its shores.

The government has argued that extraction laws going back to 1993 are based on crude at $20 a barrel and unrealistic at prices that are now more than four times as high. But the IOCs have warned Nigeria against deterring investment.

Alison-Madueke, who admitted some imperfections in the PIB, however, said that the bill was still open for discussion.

Her submission followed a heated debate over the perceived flaws in the PIB, particularly the fiscal regime, which was said to have put the indigenous oil companies and multinationals at a disadvantage while favouring the government.

According to the Managing Director, Seplat Petroleum Development Company, Mr. Austin Avuru, the PIB allowed no access to assets and offered harsh gas fiscal terms including doubling of gas taxes as well as tough tax and royalty rates for small fields, while government’s take in the Production Sharing Contracts (PSCs) had increased to 77 per cent from 30 per cent.

He also said the proposed bill does not offer the much taunted incentives for existing and new players because there had been slight increase in government’s share of the joint venture from 86 per cent to 91 per cent as well as negative to 60 per cent in gas ventures.

But in defence of the legislation, the minister insisted that the PIB was a huge bill, which was better addressed in separate parts. She noted that the underlying intent of the PIB was to engender competitiveness in the industry, adding that there were ongoing discussions with multilateral companies who have raised concerns over the bill’s fiscal regime.

She said in the proposed bill, all cost-based incentives had now been replaced with production-based incentives while it would also increase participation of new players in the Nigerian oil and gas sector through the proposed new acreage management system which involves the release of acreages that have been held without activity due to certain constraints.

This, she said, would boost exploration activities, which had been limited. She said the government would continue discussions with the multinationals “because there seems to be disparity in terms of where we stand on the fiscals.”

Continuing, Alison-Madueke said the fiscal reforms in the PIB, if passed, would be the most comprehensive in four decades, describing the increased government take from oil revenues in the PIB as small and fair, given sustained higher oil prices.

“Nigeria is not alone in the tightening of fiscal terms,” she said. “The goal has always been to find a fair balance between the government and the contractors’ shares.”

“The government is not in the business of oil and gas to make a loss for the country. At the same time, the intent is to remain competitive to attract investment,” Alison-Madueke told delegates at the economic summit. She said a large part of the issues raised would have to be dealt with in the regulation so they could be looked at and amended.

However, the Speaker of the House of Representatives, AminuTambuwal, who was represented by the Chairman, House Committee on Banking and Currency, Hon. Chukwudi Onyereri, said that the PIB was the most critical bill in the National Assembly, adding that all clauses of the bill would be considered on merit.

He urged all parties to take their grievances or contributions to a public hearing on the bill before it is passed into law as any objection tendered after its passage would have no effect.

The public hearing on the bill is scheduled for the first quarter of next year. He said: “If there are things they (multinationals) have to thrash out, let them thrash it out now before it comes out, because when it is passed into law, it does not have any individual opinion anymore. What they should do is to break up all these arguments, and come to the public hearing.”

In his contribution, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mr. Andrew Yakubu, said although the PIB was not a perfect document, it incorporated well thought through challenges, which would benefit indigenous companies.

Represented by the Group Executive Director, Exploration and Production, NNPC, Mr. Abiye Membere, he said the cost reduction initiatives in the industry was a collective one and cautioned against overbloated costs.

The indigenous operators, however, observed that the sectoral reforms were left unaddressed in the proposed PIB, as refineries were not even mentioned while regulation had been weakened.

Meanwhile, the Managing Director of Shell Petroleum Deveopment Company (SPDC), Mutiu Sumonu, has revealed that the Federal Government generated N7 trillion (about $46 million) from deep-water operations of the oil industry in the last six years.

Speaking Tuesday at the economic summit in Abuja, Sunmonu said: “There is a perception out there that government is not making money from deep water operations, that the multinationals are making it from the deep-water. “Up to 2011, we actually have deep-water not too long ago; 2005, that was the first one. Up to 2011 government had made about $46 billion from deep-water.

“The multinationals spent $46 billion, because in deep-water, the multinationals put up all the investment, government does not put up any investment.

“So the multinationals put up the $46 billion and they have also realised about $11 billion but government has realised about $46 billion, so it is not true that government is not making any money from deep water operations.”

He said there was the need to strike a balance between government and the industry’s take to enhance investment.

However, in reaction to Sumonu’s statement, Membere said for the IOCs to see the $46 billion expenditure in the deep-water concessions as revenue that was realised by the Federal Government, while the IOCs made $11 billion, was grossly misleading.

“There is no way somebody who takes 80 per cent profit share will get $11 billion out of a $46 billion business,” he said.


One thought on “Alison-Madueke: FG to Hold Oil Licensing Round This Year

  1. Yes the PIB should be fairly examined,however, the managing director of Shell should explain how 80% of $46 billion is now $11 billion.
    These IOCs have reaped our government off for too long.

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