The establishment of a legislative framework to clearly spell out fiscal terms in the oil and gas industry through the passage of the Petroleum Industry Bill (PIB) would allow the country tap the full potentials of the gas resources in the nation’s Deepwater acreages, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, has said.
Kyari was speaking at a one-day public hearing on “Inclusion of Gas Terms in Production Sharing Contracts (PSCs)” organized by the House of Representatives Joint Committee on Gas Resources, Petroleum Resources (Upstream and Downstream) on Monday.
NNPC spokesperson, Kennie Obateru, quoted the GMD as saying that investors needed clarity on fiscal terms to be encouraged to commit their capital for gas development projects in the country.
A functional legislative framework, Kyari said, provides a clear sight on how investors can recoup the capital on investment and make gains.
He said this was one of the issues the PIB would resolve when it is finally passed by the National Assembly.
“The passage of the Bill would help resolve issues of fiscal terms in the Production Sharing Contracts (PSCs) in the country.
“The PSC simply says the parties can sit down together and agree on a framework for monetizing the gas resources on terms that are mutually acceptable,” the NNPC GMD said.
He stressed the need for the PIB to be passed urgently to help resolve the knotty issue of a gas pricing mechanism to drive gas development in the country.
The PSC agreements, he explained, were focused mainly on crude oil production, leaving the gas development component to the discretion of the parties, thus making the provision in PSC for development of gas very weak.
Kyari said the Ministry of Petroleum Resources under the leadership of the Minister of State for Petroleum Resources, Timipre Sylva, was aggressively driving gas pricing policy as part of the Federal Government’s gas commercialization initiative.
The Speaker of the House of Representative, Femi Gbajabiamila, said the Joint Committee on Gas and Petroleum Resources was set up in November 2019 to help resolve issues hindering the efficient development and utilization of the abundant natural resources in the country.
He said the public hearing was convened to enable the Committee collate the views of stakeholders for a thorough review of the statutes.
The Chairman of the Joint Committee, Nicholas Mutu, said the Committee was mandated to work with stakeholders to review the existing PSCs with a view to accommodating fiscal terms for gas.
He said the committee was also mandated to liaise with the NNPC, Department of Petroleum Resources (DPR) and other relevant agencies to determine the current situation in the gas sector with the aim of proffering solutions to attract investors and grow the economy, and providing amendment to current PSCs for further legislative action.