After the mind boggling revelations of the rot associated with the management of petroleum products subsidy, and the emotional outburst from Nigerians condemning this 'corruption bazaar,' the Federal Government, particularly the Presidency, has now decided to push out the much awaited oil and gas therapeutic drug- The Petroleum Industry Bill (PIB). That President Goodluck Ebele Jonathan said within weeks, the bill will be passed by the National Assembly is among the import of this expose by BEN NDUBUWA.
The Petroleum Industry Bill is an attempt to bring under one law the various legislative, regulatory, and fiscal policies, instruments and institutions that govern the Nigerian petroleum industry.
The Bill is expected to establish and clarify the rules, procedures and institutions that will entrench good governance, transparency and accountability in the oil and gas sector. It aims to introduce new operational and fiscal terms for revenue management to enable the Nigerian government to retain a higher proportion of the revenues derived from operations in the petroleum industry.
However, following pressures from the international community on Nigeria to take steps to curb environmental degradation, the Minister of Petroleum Resources, Diezani Alison-Madueke had assured that the PIB would be passed in a couple of weeks with the assistance of the members of the National Assembly and that the bill will seek to address not only the issue of environmental degradation but also ensure greater equity and participation of the Niger Delta communities in the oil and gas sector.
The UN Environment Programme (UNEP) had recently announced that International Oil Companies (IOCs) and other oil firms had systematically contaminated a 1,000 sq km (386 sq mile) area of Ogoniland, in the Niger delta, with disastrous consequences for human health and wildlife. And that Nigerians will "pay a high price" for the economic growth brought by the oil industry.
Though the UNEP report calls for a clean-up fund of $1bn (£614m) for spills in Ogoniland, and says it will take 25-30 years to restore the environment. It recommended that much of the funding for the clean-up is to come from the oil companies.
But Ane Leslie Adogame, Executive Director, Sustainable Research and Action for Environmental Development (SRADev) told LEADERSHIP SUNDAY that the remediation fund being recommended by the UNEP report is meager.
He contended that even $200 billion may not be enough for the 30 years period and that the fund should not only necessarily come from the oil companies but that the government needs to come out with a comprehensive legislation and extra budgetary allocation to handle any remediation plan.
The Minister of Petroleum Resources, Diezani Alison-Madueke had refuted claims by environmental groups that there are more oil spills each year in the Niger Delta than in the Gulf of Mexico. She, however, acknowledged that about nine million barrels of oil may have been spilled in the Niger Delta but pointed out that the spills dated back to 1938 when oil exploration and production started in the country.
She attributed the spills to piracy and misapplication of the country's laws, assured that the country has put in place strict guidelines to address the situation. 'We have seen so many pirates. The militancy in the Niger Delta obviously created problems.
There was piracy in terms of bunkering but there may have been some misapplication of laws over the years. This, as we see now, has become a thing of the past because we are implementing extremely stringent laws, processes and procedures and to ensure that environmental degradation is addressed in time and is effectively remediated', she said.
Mutiu Sunmonu, the Managing Director of the Shell Petroleum Development Company of Nigeria said that it is important to improve understanding of oil spills in Ogoniland. 'All oil spills are bad - bad for local communities, bad for the environment, bad for Nigeria and bad for [the company].
We clean up all spills from our facilities, whatever the cause, and restore the land to its original state. The majority of oil spills in Nigeria are caused by sabotage, theft and illegal refining. We urge the Nigerian authorities to do all they can to curb such activity, and we will continue working with our partners in Nigeria, including the government, to solve these problems and on the next steps to help clean up, he said.
Chevron recently tackled a burning inferno of its offshore gas rig. The fire which was stopped a couple of months back, was attributed to the possible failure of surface equipment during drilling operations that led to a loss of well control. The fire had caused a lot of discomfort to the surrounding environment.
And communities had threatened a legal action against Chevron, but for the quick intervention of the federal government.
However, an official of the oil major had told LEADERSHIP SUNDAY that the oil company was prepared to do any thing possible to end the fire in few days time and had appealed to the host communities to bear with them as Chevron is ready to pay compensation to avoid any legal battle.
Quickly Chevron had contracted and mobilised the Transocean rig Baltic to commence drilling a relief well. "The time required to complete the relief well is uncertain, but could extend for some period. Chevron is deploying additional drilling experts and well control specialists to Nigeria to assist with well control efforts and the relief drilling process", Chevron had said
According to Executive Director, SRADev, IOCs should not try to shift blames on the devastating impart of the oil spill and gas flaring in Ogoniland. He noted that these international oil companies, over the years, knew that they have not been into the best practice in their operations.
He argued that no matter how IOCs and the government tend to shy away from the issue, they cannot run away from doing something about the spills and gas flaring, no matter how many years it is delayed. Mr. Olayinka Ohumakin, Head, Department of Engineering, Covenant University, said in a telephone interview with LEADERSHIP SUNDAY that though he has not studied the PIB thoroughly, however, he believes that the issue of environmental degradation should be top on the list of the new law and what it intends to achieve for Nigeria in the oil and gas industry.
The final document which will now be a law as well as the guiding principle and roadmap for a new oil and gas industry in Nigeria is also expected to correct the issue of gas wastages in the form of gas flaring in the industry and in the Niger Delta region. The bill is also seeking ways to increase domestic gas supplies.
The bill provides that all existing and future petroleum mining lessees shall meet their domestic gas supply obligations for the specified periods as the gas will be used for power generation and industrial development. Failure to meet this obligation attracts a stiff penalty. According to the bill, gas flaring or venting will cease from December 31, 2012.
The new PIB provides that the lessee producing gas will be required to carry out operations as may also be required to increase production in order to dedicate a specific volume of the gas produced towards the requirements of the domestic market.
The bill says that the volume of gas to be dedicated by each lessee for the domestic gas supply obligation, shall be based on an allocation system among lessees as determined by the regulating agency from time to time and would be based on plans submitted by the lessees.
It stated that the weighted average benchmark unit costs of supply of the fields dedicated to the domestic gas supply obligation shall not be in excess of the benchmark unit costs of fields dedicated to: exports or sales of wholesalers in the domestic market.
The government shall determine the amount of condensates related to sales under the domestic gas supply obligation and allocate such condensates on a barrel of condensate per million cubic feet basis. Nigeria is said to be losing over $1bn (N157bn) to gas flaring every year.
Only 12 per cent of the country's liquefied natural gas are consumed for power and industrial uses. In improving gas production and utilisation, experts said that it could be tackled in five ways which includes, robust infrastructure delivery, gas supply growth, elimination of wasteful flares through legislation, viable commercial framework and focused kick-off of gas industrialisation.
According to them, government as a key stakeholder is expected to reinforce all gas network and commence the opening of new networks. They said that reduction in flares is by ensuring all new developments have gas utilisation schemes; introducing regulation to force supply growth and penalising flares as some ways to consider in reducing gas flaring.
The bill is also expected to give so much power to the Minister of Petroleum Resources. The Minister is to grant, revoke and reallocate licenses.
The bill is also expected to create a peaceful business environment. The bill seeks to align the interest of the host communities to those of the oil companies and the government.
The Petroleum Host Communities (PHC) Fund, which will be funded with 10 per cent of the net profit of the oil companies operating in the communities, shall be used to develop the economic and social infrastructure of the host communities.
Communities will forfeit contributions in the Fund when vandalism or unrest causes damage to upstream facilities.
The Oil Producing Communities in the Niger Delta have therefore called for the retention of the 10 per cent equity share for host communities in the Petroleum Industry bill. The Grand Patron of the Oil Producing Communities of Nigeria, Dr. Wellington Okirika, argued that it would be unfair on the oil bearing communities to remove the provision as being alleged in some quarters.
Okirika maintained that those who drafted the bill had the intention of correcting most of the wrongs that had been done to the oil producing communities in the Niger Delta.
He noted that the PIB seeks to address the need for Nigeria to have more indigenous participation in the oil industry in the country. According to him, it would also encourage all regulatory authorities, operators, contractors, sub-contractors and other entities involved in any transaction in the Nigerian oil and gas industry to consider the Nigerian content as an important element of their overall project execution.
He lauded the directive of President Goodluck Jonathan in calling for the quick passage of the bill. Okirika, who is also the Bolowei of Gbaramatu Kingdom in Delta State, expressed sadness that the sixth National Assembly failed to pass the bill into law because of the heavy politicking that accompanied it.
He appealed to the present National Assembly to do Nigerians proud by passing the bill this time around. Ohumakin, the University Lecturer agreed with Okirika that the government will be getting it wrong if gas flaring, other environmental degradation and good community relations are not properly articulated in the new oil and gas industry bill.