Lagos — Indications have emerged that a key area of contention between the Federal Government and the International Oil Companies (IOCs) on the Petroleum Industry Bill (PIB) may have been resolved as the government has realigned its position with that of the oil majors on the issue of the transitional period between the existing Joint Ventures (JVs) and the proposed Incorporated Joint Ventures (IJVs).

Speaking yesterday in Lagos, Minister for Petroleum Resources, Dr. Rilwanu Lukman, said he agrees with the position of the JV partners that the transitional period between the two fiscal arrangements could take two to three years.

The issue of transforming the JVs into IJVs as a solution to the problem of funding oil and gas projects in Nigeria is one of the key proposals in the PIB before the National Assembly.

Before yesterday's pronouncement by the minister, both his ministry and the Nigerian National Petroleum Corporation (NNPC) had been pushing for a transitional period of twelve months.

The IOCs had penultimate week in Abuja, accused the NNPC of unilaterally designing the structure of the proposed IJVs which will replace the present JVs after the passage of the PIB, without a proper dialogue with them.

But speaking on the issue yesterday at the 2009 Policy Dialogue organised by the Petroleum Club, Lukman said the transitional period could take up to three years.

He said: "I think myself, to do it properly and make sure it is functional; you may well need anything between 24 to 36 months. There is a lot of work to be done; the real work will start when the bill is passed. Even, incorporation and setting up of the joint venture companies is going to take a long time. Setting up NNPC subsidiaries; some of them are already in place; some of them will be in place, will take a long time. The setting up of the organs of government; some of them are already in place; some of them have to be created, will take a long time and if we try to rush it, it may mess up the whole thing."

Lukman also hinted that government would dialogue with its partners on the issue to arrive at an acceptable transitional period.

The minister, who spoke on, "Launching the Nigeria's petroleum industry for the challenges of the petroleum industry," stressed that the passage of the Petroleum Industry Bill, would among other things, ensure "incorporation of the current loose joint venture operations in the country to become Incorporated Joint Venture Companies with independent governing boards and the mandate to resort to the money market in funding all operations."

The Chairman of the Oil Producers Trade Section group of the Lagos Chamber of Commerce and Industry and Chairman of Shell Companies in Nigeria, Mr. Basil Omiyi, said at the recent Nigerian Association of Petroleum Explorationists (NAPE) conference in Abuja that NNPC had not dialogued with its partners on the structure of the IJV.

Omiyi stressed that the majors needed to be carried along for a smooth transition from JV to IJV.

According to him, the IJV needed a transitory period of between two to three years to commence operations rather than twelve months being proposed in the PIB.

He also said that the IJV must be structured in a way that would attract funding adding that it must not be seen as a government entity but a commercial concern.

The incorporation of the Joint Ventures will enable the incorporated entities to go to the financial market, raise capital for the business and pay dividends to their shareholders.

NNPC currently has loose joint venture agreements with Shell Petroleum Development Company of Nigeria Limited, Mobil Producing Nigeria Unlimited, Nigeria Agip Oil Company, Chevron Nigeria Limited and Elf Petroleum Nigeria Limited.

The corporation holds 55 per cent interest in its joint venture with SPDC and 60 per cent interests in the other JVs.