Nigeria: Senate Probes Oil and Gas Exploration Contracts

28 November 2019

Abuja — The Senate has resolved to probe oil and gas exploration contracts involving International Oil Companies (IOCs) in the country.

It has, therefore, directed its Committee on Petroleum Resources (Upstream) headed by Senator Bassey Akpan to conduct a comprehensive review of the relevant laws; product sharing contracts (PSC); joint venture contracts (JVC); and arrangements governing abandonment, decommissioning, remediation and investigate degree of compliance with these laws by oil companies operating in Nigeria.

The upper chamber also directed all oil and gas companies to give account of their budget performances to the Committee on Petroleum (Upstream) so as to determine their level of compliance with the relevant laws.

These resolutions were sequel to the adoption of a motion titled: "The need to investigate the degree of enforcement of abandonment and decommissioning obligations in oil and gas exploration contracts" moved at plenary by Senator Gershom Bassey and supported by seven other Senators.

In his lead debate on the motion, Bassey said abandonment and decommissioning costs are those associated with the physical removal and disposal of obsolete oil installations at the end of their operational life and the restoration of the environment to the state it was before exploitation.

According to him, the United Nations Convention on the Law of the Seas Article 60 (3), Geneva Convention Article 5 (5), the Oslo and Paris Convention for the Protection of Marine Environment, the 1967 Territorial Water Act and 1969 Petroleum Act, all have provisions for mandatory abandonment and decommissioning for oil companies.

He added that "budgetary provisions are approved for oil companies in their yearly budgets as contained in the JV/PSC clauses for abandonment and decommissioning, but such allocations are scarcely utilised by oil companies operating in the country for its purpose."

Bassey added that the provisions for decommissioning and restoration are recognised even if the decommissioning is expected to be performed much later.

The legislator pointed out that most oil companies operating in Nigeria fail to restore exploited sites after the expiration of their lease as witnessed in the Niger Delta region.

In her contribution, Senator Stella Oduah said the global best practices whenever there's decommissioning is ensuring proper clean-up to avoid land degradation and other environmental hazards that often caused problems for the people.

In his remarks, Senate President, Dr. Ahmad Lawan, charged the Committee on Petroleum (Upstream) in particular and other various standing committees in general to always be alive to their oversight functions to all government ministries, departments and agencies with a view to protecting Nigeria and the citizens.

Also yesterday, the Senate urged the federal government to improve funding of the Border Community Development Agency (BCDA) as well as mandating the 21 border states to dedicate 1.5 per cent of consolidated revenue fund and 30 per cent of ecological fund to the development of border communities.

It also directed its Committee on States and Local Government headed by Senator Olamilekan Mustapha to carry out a holistic investigation on the level of compliance with the Act establishing the BCDA.

This was sequel to the consideration of a motion titled: "The need to pay attention to the plight of border communities in Nigeria" sponsored by Senator Sadiq Umar and 21 other Senators at plenary.

Umar, in presenting the motion, said: "there exists a Border Community Development Agency (BCDA) established in 2003 by law to cater for the plight and development of border communities in Nigeria."

According to him, when the agency was founded, it had well spelt counterpart funding mechanism under the BCDA Act 2003 to ensure effective service delivery for the development of the border communities.

This, he said, include 7.5 per cent of the total revenue allocation due to the federal government deductible at source and 15 per cent of the total monthly statutory allocation due to member states of the agency deductible at source.

Others are 55 per cent of the monies due to member states of the agency from the ecological fund; and 10 per cent of the monthly statutory allocation due to the border local government deductible at source.

Umar explained that "deductions were made from these accounts even before the commencement of the commission without significant impact on the member states, local governments and border communities and this led to the border state governors' protest and the subsequent amendments of the relevant section (Section 9) by the National Assembly in 2006."

He therefore maintained that "the border communities are in dire need of development in the areas of infrastructure, health, education, water and access roads, but the BCDA has not been able to cater for the needs of these communities because of insufficient funding."

The Senator cited the example of October 2009 when about 84 school children drowned in a river from Bukuro, a border community in Baruten Local Government Area in Kwara State while going to school in the neighbouring border community in Benin Republic.

While pointing out that neighbouring communities from other countries like Benin Republic, Niger and Cameroon, which are less endowed in terms of resources, are enjoying world class facilities, he lamented that indigenes of border communities in Nigeria are at the mercy of other countries for their medical needs, education and others with the attendant security risk to Nigeria.

Contributing, Senator Isah Jibrin stressed the need for federal government to put in place an intervention fund to address the problems facing border communities in the country, which he noted are beyond the powers of state and local governments.

He warned that if the issues are not immediately addressed, people in the border communities might be forced to aid and abet crimes capable of causing economic sabotage and security threats to Nigeria.

The Senator wondered why Nigeria, as the giant of Africa, would continue to fail in providing intervention in infrastructures and social amenities for border communities while smaller neighbouring countries have been living up to expectations to the extent of being the ones rescuing Nigerians living at the borders.

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