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Operators in the oil and gas industry have identified gaps in the Petroleum Industry Governance Bill (PIGB) passed by the Senate.


Yinka Folawiyo Petroleum Company Limited Chief Executive Officer (CEO) Mr. Tunde Folawiyo; Wema Bank Plc CEO Mr. Segun Oloketuyi; Lead Partner, Legal Advisory Partnership, Anthony Idigbe (SAN); and President, Business School, Netherlands, Mr. Lere Baale, discussed the bill at a breakfast lecture entitled: "Petroleum Industry Bill: Challenges and opportunities," organised by the Island Club at Onikan, Lagos.


Folawiyo, the guest lecturer, said: "When the BPE holds 49 per cent of an asset we all know what that means. It means we are preparing for another public ownership. BPE is not set up to own asset; it was set up to privatise public assets."


According to him, there is "nothing in the proposal that has provision to reduce gas flaring, which is one of the major challenges the country is facing. It will not also be subject to Procurement Act. This appears counterproductive. Accountability and transparency will suffer for this.


"No provision about ownership of pipelines, depot and other assets of government. Nothing is also mentioned in terms of pricing mechanism for downstream sub-sector."


However, opportunities abound in the bill, which is a great start for the oil sector, he added.

Olaketuyi, represented by Head, Energy Desk of Wema Bank, Segun Oderinde, stated that PIGB would separate the minister from the industry and the industry from the minister. "PIB is to ensure that producers must key their supply obligations on gas. This is an opportunity because over 28 per cent of banking sector loans portfolio was devoted to the oil and gas sector," he said.


Baale noted that Nigerians "should not only be excited by the level of progress being made on the bill but also look for opportunities that the bill comes up with."


The Chairman, Island Club, Mr. Banji Oladapo, corroborated Baale, stressing that members of the club were working round-the-clock to take advantage of opportunities in the PIGB.


Idigbe (SAN), represented by Nnamdi Oraukwu, said: "Presently, only the first fragment of the PIB has been passed by the senate. It must be observed that the PIGB only deals with the one aspect of the PIB, that is the governance and institutional framework of the Nigerian Petroleum industry, and as such would not deliver the full benefits of the intended reforms except if the other aspects of the PIB such as the Petroleum Host Community Fund and Petroleum Fiscal Regime were also passed into law.


"For instance, we know that one of the major challenges facing the Nigerian petroleum industry is host community and Niger Delta issues. Until the recent peace diplomacy to the oil region by the Federal Government, the militant attacks in the Niger Delta led to significant amounts of shut-in production at onshore and shallow offshore fields and frequent declaration of force majeure by oil and gas companies in Nigeria."


Idigbe noted that militancy led to drastic decline in revenue projections and crude oil barrels for 2016 to 2018 from 2.2mbpd-2.5mbpd down to a mere 1.5mbpd in 2016, thereby worsening Nigeria’s economic crisis and pushing the country deeper into recession, exchange rate crisis, and stagflation.


"Therefore, it is important that any legislation to address the challenges in the Nigerian oil and gas industry must make provisions on how to effectively address the Petroleum Host community issues," he said.


He said the non-inclusion of the Petroleum Fiscal Regimes aspect of the Petroleum Industry Bill (PIB) may mean that investors would continue to adopt a wait-and-see attitude, refraining from making any new major investment decision in Nigeria.


"The fact is that it is the Fiscal Regime aspect of the PIB that will guide the final decision of investors on how much to invest in the Nigerian petroleum sector as it has direct impact on the economics of the investments in the Nigerian oil and gas sector vis-a-vis other Petroleum host countries. This aspect is therefore, very critical.


"I adopt the view of a writer on the issue of the prolonged evolution of the PIB to say that progress is better than perfection. This fits perfectly when one thinks of the several attempts that have been made in the past to pass the almighty PIB.


"In line with recommendations made by various stakeholders, the government has decided to break it up and pass it in parts. While the version approved by the Senate is not perfect by any means, it is progress nonetheless - which is what we need in Nigeria right now," Idigbe said.