- Â Itâ€™s promise fulfilled, says Saraki
- Â Crude oil price stabilises at $53 as OPEC extends output cut
Damilola Oyedele, Chineme Okafor, James Emejo, Onyebuchi Ezigbo in Abuja and Ejiofor Alike in Lagos
The ding-dong over a legal regime that would reform and make the petroleum industry more transparent and efficient began a homeward stretch Thursday as the Senate passed the Petroleum Industry Governance Bill (PIGB).
The bill, when concurred to by the House of Representatives and assented to by the president, would institute a new governance structure in the management of the nationâ€™s oil industry assets and its manager, the Nigerian National Petroleum Company (NNPC).
The Senate gave the bill its nod on a day crude oil prices dropped $1.24 a barrel to $52.72 before regaining ground at $53.76 as the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members decided to extend cuts in oil output by nine months to March 2018.
The PIGB, which is the first leg of the 17-year-old Petroleum Industry Bill (PIB), which has been broken into five separate bills by the 8th Senate, scraps the NNPC, the Department of Petroleum Resources (DPR), the Petroleum Products and Pricing Regulatory Agency (PPPRA) and several government agencies in the oil sector and now creates three new entities to oversee activities in the sector.
The three new entities are the National Petroleum Company (NPC), the National Petroleum Assets Management Commission (NPAMC) and the Nigeria Petroleum Regulatory Commission (NPRC).
Under the new governance structure, the NPC would be an integrated oil and gas company, operating as a fully commercial entity that will run like a private company, while the NPAMC would be a single petroleum regulatory commission, which would focus mainly on regulating the industry.
The bill also saddles the commission with the responsibility for health and safety regulations in the industry, and would collaborate with the Ministry of Environment on environmental issues.
The regulatory commission would be funded through a retention of 10 per cent of the revenue it generates for the government of the federation. The expenditure is however subject to appropriation by the National Assembly.
The NPRC would replace and take over the functions of PPPRA and DPR.
The rite of final passage began when the bill was read the third time and the Committee of the Whole considered the Report of the Committee on Petroleum Upstream, Petroleum Downstream and Gas presented by Senator Donald Alasoadura. It then went through the clause-by-clause ritual with minor amendments before it was passed.
â€œWe made a commitment and itâ€™s being fulfilled,â€ an elated Senate President Bukola Saraki said, adding: â€œThis bill is not only for Nigerians but for our investors. We are proud of what has been done.â€
Sarakiâ€™s excitement is understandable given the fact that the PIB had been with the National Assembly since 2000 but had suffered passage delays because of objections and concerns raised by International Oil Companies (IOCs) who felt threatened by the fiscal regimes proposed by the bill.
The 8th Senate, therefore, decided to split the bill into five, isolating the contentious fiscal issues in separate bills, for easier passage.
However, the PIGB still has another hurdle to overcome as the House of Representatives has a different version before it.
The House of Representatives said Thursday that it did not yet have a specific timeline for the passage of the bill. The deputy spokesman of the House of Representatives, Hon. Gaza Gbefwi, told reporters that the lower chamber was still carefully considering inputs made by local and international stakeholders during a seminar on the bill last year.
The passage got positive reviews from industry stakeholders Thursday describing it as a welcome development that would create a vibrant industry.
Speaking to THISDAY, the Chief Executive Officer of Seplat Petroleum Development Company (SPDC), Mr. Austin Avuru, said the passage of the bill would set the tone on how the oil and gas industry should operate.
â€œIt is a welcome development. That is the governance bill and it sets the tone on how the industry should operate,â€ said Avuru, whose company is listed on both the London and Nigerian Stock Exchanges. He expressed the hope that the lawmakers would also pass the second aspect of the bill that governs the fiscal regime before the end of this year.
Avuru urged the Senate and the House of Representatives to harmonise the different versions of the bill before them.
The Chief Executive Officer of the International Energy Services, Dr. Diran Fawibe, commended the upper chamber for passing the bill.
He said the passage by the Senate would put pressure on the House of Representatives to pass their own version for both chambers to harmonise the bill for the benefit of Nigeria.
â€œWe have to commend the Senate for taking the right step in the right direction. That is what is expected of the upper chamber because the bill has been languishing in the National Assembly for over 10 years,â€ he said.
The All Progressives Congress (APC) commended the Senate on the passage of the bill.
“We are very excited that the bill was passed today after about 12 years delay. We specially commend the Senate President, Dr. Bukola Saraki, for his focused leadership of the 8th Senate, which has produced several legislative actions that have positively affected the lives of Nigerians, promoted good governance and advanced on-going efforts by the APC-led administration to rebuild the country,â€ the party said in a statement Thursday by its National Publicity Secretary, Malam Bolaji Abdullahi.
“The passage of the bill is an indication that our federal legislators are diligent and reform-minded, and are committed to fulfilling the promises our party made to Nigerians,â€ he said, calling on the House of Representatives to follow the example of the Senate by also promptly passing the bill.
Crude Oil Price Stabilises at $53
Meanwhile, crude oil price Thursday dropped $1.24 a barrel to $52.72 before peaking at $53.76 as OPEC and non-OPEC member countries decided to extend cuts in oil output by nine months until March 2018.
While the global benchmark, Brent crude oil traded at $53.76, the US light crude traded at $51.16 per barrel.
Non-OPEC oil producers led by Russia agreed Thursday to join OPEC in extending production cuts for nine months until March 2018, Reuters quoted OPEC delegates as saying.
The combined cap on oil output for the OPEC and non-members was agreed at around 1.8 million barrels per day.
The next OPEC and non-OPEC meeting is scheduled for November 30, 2017, delegates said.
Reuters reported that the cuts are likely to be shared again by a dozen non-members led by top oil producer Russia, which reduced output in tandem with the oil cartel from January.
OPEC’s cuts have 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.
Crude oil’s earlier price decline, which started in 2014, forced Russia and Saudi Arabia to tighten their belts and led to unrest in some producing countries including Venezuela and Nigeria.
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.
OPEC oil ministers were continuing their discussions in Vienna as at press time Thursday after three hours of talks.
Non-OPEC producers were scheduled to meet OPEC later in the day.
In December, OPEC agreed its first production cuts in a decade and the first joint cuts with non-OPEC members, led by Russia in 15 years. The two sides decided to remove about 1.8 million barrels per day from the market in the first half of 2017, equal to 2 per cent of global production.
Despite the output cut, OPEC kept exports fairly stable in the first half of 2017 as its members sold oil from stocks.
The move kept global oil stockpiles near record highs, forcing OPEC first to suggest extending cuts by six months, but later proposing to prolong them by nine months and Russia offering an unusually long duration of 12 months.
“There have been suggestions (of deeper cuts), many member countries have indicated flexibility but … that won’t be necessary,” Saudi Energy Minister Khalid al-Falih said before the meeting.
Falih also said Saudi oil exports were set to decline steeply from June, thus helping to speed up market rebalancing.
OPEC sources have said meeting would highlight a need for long-term cooperation with non-OPEC producers.
The group could also send a message to the market that it will seek to curtail its oil exports.
“Russia has an upcoming election and Saudis have the Aramco share listing next year so they will indeed do whatever it takes to support oil prices,” said Gary Ross, head of global oil at PIRA Energy, a unit of S&P Global Platts.
OPEC has a self-imposed goal of bringing stocks down from a record high of 3 billion barrels to their five-year average of 2.7 billion.
“We have seen a substantial drawdown in inventories that will be accelerated,” Falih said. “Then, the fourth quarter will get us to where we want.”