Vanguard (Lagos)

20 February 2013

Nigeria: Accept Realities of PIB, Federal Govt Tell IOCs

Abuja — Given its inability to reduce the high incidence of crude oil theft and pipelines vandalism in the country, the Federal Government has reached out to the British Government and the international community to assist it in curbing the menace.

An estimated $6billion is lost annually to oil theft and attendant consequences impacting negatively on the economy.

Already, President Goodluck Ebele Jonathan is said to have reached out to his British counterpart, Prime Minister David Cameron and other foreign leaders on the issue, even as it plans to use finger printing device to catch oil thieves going forward.

The Minister of Petroleum Resources Mrs. Diezani Alison-Madueke, disclosed this on Tuesday in Abuja at the ongoing Nigeria Oil and Gas, NOG 2013 Conference, and Exhibitions.

She said the call for foreign intervention is based on the realisation that the stolen crude from Nigeria are not sold in the Gulf of Guinea, neither are the proceeds from such illegal transactions laundered through banks in West Africa, but are rather shipped away from the sub region.

She said the President was reaching out to his counterparts in other parts of the world to seek combined international efforts in recovering the proceeds from the stolen oil, which she described as "blood money", as well as combating the menace with the support of other stakeholders like the security forces.

She said: "We are championing the crude oil finger print to detect crude oil theft as purchased by other nations. Also, the support of the global community is also being sought."

She however, refused to disclose other countries the President has reached out to for assistance, saying: "I cannot mention the states because the issue of vandalism and bunkering are major security issues and the security services will be working on these issues hand in hand with us. The President of course will be the one to begin to call in his colleagues from other countries that could assist us in phasing out this menace. I pointed out that we already have Mr. President meeting with David Cameron of England a week ago, and it came up there and they have already pledged to assist us fully in dealing with this. As the structures are put in place, they will begin to come on board, they are very ardent at joining us to actually rid ourselves of this particular scourge, but I cannot begin to list the countries right now."

Alison-Madueke noted that given the seriousness with which government is tackling the menace, the incidence of oil theft would have been drastically reduced within the next 12 to 18 months.

Conceding to new fiscal terms

With regard to giving in to pressures from the international oil companies, IOCs, to review the new fiscal terms being proposed in the Petroleum Industry Bill, PIB, currently undergoing legislative scrutiny at the National Assembly, the minister said that government was consulting widely on the issue.

"Let me put it like this, it has been a very topical issue as you know for quite some time, and we have been in discussions with them for quite a while. Discussions are still ongoing, and at the end of the day, we are mindful of the fact that they have been our partners for over 70 years, and we expect that they will be our partners along with the independents who have been growing from strength to strength everyday for another 70 years or more.

"We have continued to look at the issues, and now as you know, it is within the purview of the National Assembly, so whatever happens going forward, will happen in conjunction with the National Assembly and I am not in a position to comment on that because it is under the purview of the National Assembly. But be rest assured that we will continue to work very closely with the National Assembly," she clarified.

The minister equally admitted that there were some complexities involved in the passage of the PIB, but maintained that no matter the issue, "...We will have to implement the law in a manner that will not disrupt oil and gas operations or negatively impact the operations and independence of the IOCs or in fact, the revenues accruing to the government from these operations.

"We recognise the complexities of the transition period after the PIB is passed into law and to this end, an implementation framework is being produced across functional teams.

"These are complexities that deal with managerial and administrative abilities, and we will need to ensure that it will be easy to move forward with the various issues that will be raised; issues to deal with IT, human capacity development and electronic information management systems. There are so many issues that will have to be put in place, to be learned and re-learned by the sector as this PIB with its many ramifications is put in place.

"It is just pointing out that we are fully aware of these issues and we will be working on them hand in hand with all our stakeholders and partners in the business. It is to ensure that it is clear we are not dusting over the challenges that are to come, there is no transformation that we will do just like that; every transformation has its challenges and it is a major change in thinking, processes and the way we do things in the oil and gas sector. We want to make it clear that we are fully aware of what it will take to ensure that the change actually happens as smoothly as possible. There will always be hiccups, but we want to minimise them as much as possible."

Accepting the realities of PIB

In his address, the Country Chair of the Shell Group in Nigeria, Mr. Mutiu Sunmonu, reiterated the need to have "a balanced PIB," which he defined as "one that will provide optimal revenue to the government whilest providing sufficient incentives for new investment to fuel growth."

In particular, he argued that the PIB needed "to address long term industry issues, like funding for the Joint ventures, JV, where funding requirements have constrained production growth."

But looking at the macro economic implications of the current industry reforms, the Director General, Budget Office of the Federation, Dr. Bright Okogu, urged the IOCs to accept the realities of the PIB.

Okogu argued that "the IOCs need to do some reality check with regard to some of their demands," adding that such demands must not be a be-all and end-all, especially as consultations are still ongoing.

According to the budget boss, the fiscal terms can be negotiated, at the end of which the eventual law that is passed will help to clear all the uncertainties in the system.

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