The Minister of State for Petroleum Resources, Timipre Sylva on Thursday spoke on the much-awaited Petroleum Industry Bill (PIB), revealing that the Executive arm would be requesting the National Assembly (NASS) to specially reconvene to receive and begin deliberations on the regulatory framework.
TheNewsGuru.com (TNG) reports Sylva made this known during a “Fiscal Regime Design, Government Revenues & Investors’ Interest in Nigeria Oil and Gas Sector” webinar hosted by the Nigerian Association of Petroleum Explorationists (NAPE).
According to the Minister, the PIB is key to the repositioning of Nigeria’s oil and gas industry under its post-COVID-19 agenda. He said the bill would be presented to the lawmakers in the next few weeks when the lawmakers have reconvened.
“I will tell you very confidently that we have finished our job, the drafting process is concluded. We have discussed with some relevant industry operators as well. At this point, what is happening is, the Ministry of Justice is looking at the draft again to ensure that it is not in conflict with existing laws in the country, and even that process has now be concluded.
“In the coming few days, we have requested the National Assembly to see if they can reconvene to accept the PIB. If that happens the PIB should be with them within the next few weeks and after that, frankly I cannot say how long it is going to stay in the National Assembly,” the Minister said.
Sylva, however, expressed optimism that the PIB would be expeditiously dealt with by the lawmakers, given that it had taken the country years to get it to this stage.
He said: “Government needs maximum fiscal environment to deal with the COVID-19 crisis. For this reason, we are proposing grandfathering in the new PIB. This, I believe will preserve current government take, while also guaranteeing investors’ returns.
“It also guarantees that investors can continue with the existing operations while earning favourable returns. The proposed PIB framework shall be based on core principles of clarity, dynamism, neutrality, open access and fiscal rules of general application.
“At the same time, investments in new acreages will be encouraged with attractive competitive terms in order to achieve economic growth.
“Investors in existing assets will be able to sign conversion contracts to obtain better terms for existing production, and to be able to explore and produce part of the existing blocks under the new block terms.”
According to him, investors that also want to continue operating under the current fiscal terms can choose to do so.
Sylva said that the host communities would be adequately covered to foster sustainable prosperity within the communities, provide direct social and economic benefits from petroleum operations to the host communities.
He also maintained that a diversification plan to non-oil economy had become a national imperative due to the impact of the COVID-19 pandemic on the oil and gas industry and other sectors of the economy.
“The PIB will provide a framework for increased petroleum industry activities in terms of developing gas for the domestic market and increasing oil production under competitive terms and support the goal of a stronger non-oil economy for the benefit of all Nigerians,” Sylva added.
According to the Minister, the business environment has been quite challenging for the oil and gas industry, the nation and the entire world and that at the same, the oil and gas industry is facing increased competition from expanding and ever cheaper renewable resources. These he said make the future uncertainty for the petroleum industry
“Current global economic outlook occasioned by the COVID-19 pandemic is predicted to create a recession which will according to IMF result in a decline of 4.9% of world GDP in 2020. Even if acceptable vaccines are developed by 2021, it may take two or more years to recover from this recession. We might be grappling with low oil demands and therefore low prices for the rest of 2020 and afterwards.
“At the same time, the oil and gas industry is facing increased competition from expanding and ever cheaper renewable resources. As an example, the French electricity company, EDF and other partners signed in Abu Dhabi a 30 years solar energy supply agreement of 3200 megawatts for a power purchase agreement price of 1 Dollar and 35 Cents per kilowatts. Or, about N5 per kilowatts.
“The future role of natural gas in electricity generation may be challenged as renewable energy begins to compete with gas for power generation. In the long term, green hydrogen derived from electrolysis may start to replace natural gas and petroleum products in a variety of sectors, if the cost of producing green hydrogen falls below 2 Dollars per kg.
“The Paris Agreement on climate change of 2015 has added urgency with respect to the elimination of fossil fuels and as a result the European Union, South Korea, Chile, and many other nations are now taking actions to become carbon neutral by 2050.
“These developments have increased future uncertainty in the petroleum industry. It is a wakeup call for Nigeria to increase efforts to reduce her dependence on oil. We must rejig our petroleum industry and energy framework in order to chart a new course. The Petroleum Industry Bill that we proposed will I believe provides this framework.
“In order to secure the future of the petroleum industry in Nigeria, fiscal and other terms must be based on a more conservative economic outlook. A framework must be created for the Nigerian petroleum industry to grow and invest in additional petroleum production even under difficult economic conditions.
“This conservation economic outlook must be based on a long term oil price of around 50 Dollars per barrel in constant Dollars terms. It is assumed that on a worldwide basis, peak oil production will occur by 2030 and peak gas production by 2040. By 2050, the world oil production will be considerably less than today,” he said.