•Oil recovers from seven-day losing streak
Emmanuel Addeh in Abuja and Peter Uzoho in Lagos
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has insisted that the provision for two regulatory agencies in the oil industry as prescribed by the Petroleum Industry Act (PIA) would result to wastages and bureaucracy in the sector.
The National President of the union, Mr. Festus Osifo, who spoke on Arise News Channel, THISDAY’s broadcast arm, noted that although there are some novel portions of the legislation which would help draw investment to the sector, the ease of doing business would be impeded by the provision.
Also, Osifo argued that the legislation does not take cognisance of the ongoing energy transition which would require the Nigerian National Petroleum Corporation (NNPC) to focus on renewable sources of energy.
“Part of the downsides in the Act is the issue of regulators in the industry. We think this is a downside, in an era where we are talking about reducing the cost of governance and the ease of doing business.
“It would be better if we had a one-stop shop on our oil and gas industry. We believe that a single regulator would be the best for the industry because the way it is today, it has introduced wastages,” the labour leader said.
On the energy transition, he explained that during the public hearings by the National Assembly, PENGASSAN had advocated that there must be a deliberate attempt to start developing renewables.
He pointed out that this was because a lot of companies today are transiting from being just oil and gas companies to energy concerns, stating that as it is, the Nigerian government is not prepared for that major development.
“So, that was our advocacy, which some percentages should be set aside to start developing our renewables, so that the energy transition will not catch up with us, because from the research currently ongoing, it is really difficult for us to predict the future of oil in the next 30 years. So, the time to act is now,” he added.
On the controversial host community fund, he argued that Late President Umar Yar’Adua’s government had in 2008, proposed 10 per cent of oil and gas profit, whereas the new law proposes three per cent of operating expenses in the previous year.
“So, the 10 per cent would have meant that any year that the companies don’t make profits, like last year most of the companies operating in this sector actually reported losses, you will get 10 per cent of nothing.
“So, we think that this three per cent as it is today now is already in law. The fact that we have 3 per cent of the operating expenditure of the preceding fiscal year, if it was 3 per cent of profit, we would have said it’s bad ,if it was 3 per cent of capital expenditure, it would have been bad.
“But operating expenditure is there because the company must operate, pay salaries, the company must expend some sizeable amounts of their fund on operating expenditure,” he maintained.
However, he said the challenge was to make sure that funds are used judiciously, so as not to have issues like what is currently happening with the Niger Delta Development Commission (NDDC).
“So, our advocacy is that this amount of money that is to be set aside should be used judiciously for us not to have issues like the ones with the NDDC,” he said.
Meanwhile, Brent crude futures surged above $71 a barrel on Wednesday, as the market paused for breath after a nine per cent rally in the first two days of the week, which erased most of the slump from a seven-day losing streak early in the month.
Although concerns over the impact of the coronavirus delta variant on fuel demand persists, there were signs that China is bringing its latest outbreak under control.
Added to that, on the production side, data showed US crude inventories fell by 1.6 million barrels in the latest week while about a quarter of Mexico’s oil production was cut after a fire on an offshore platform operated by Pemex on Sunday, taking off about 400,000 barrels per day from the market.
Brent crude oil, Nigeria’s benchmark price for purchases, rose 42 cents to $71.47 a barrel, while US West Texas Intermediate (WTI) crude increased 6 cents to $67.60 a barrel.
Over the past days, both Brent and WTI have risen around 9 per cent while the rally erased most of the slump from a week-long losing streak on the back of a resurgence in COVID-19 cases.
