Local Oil Firms Seek Stable, Competitive Fiscal Regime in PIB
12 Jul 2017
Nigerian independent exploration and production (E & P) companies have called on the federal government to ensure that the yet-to-be introduced Petroleum Industry Bill (PIB) that will govern the fiscal regime in the oil and gas industry is globally competitive and rewarding to investors.
The operators, who gathered on Tuesday in Lagos at the maiden edition of Aspen Energy Roundable, cited Algeria and Indonesia, which had stable fiscal regime but investors still ran away because their fiscal regimes were not globally competitive.
The independent E & P companies insisted that the fiscal regime in the new PIB should not only be stable but also competitive, adding that the federal government should stop focusing on rent collection and incentivise investors, “even if means putting money on the table.”
The Chairman of Aspen Energy, Mr. Bayo Opadere, in his welcome address, said the roundtable was a rallying point to articulate energy issues to realise the potentials in Nigeria’s oil and gas industry, stressing that “the potential will not be realised if we don’t break this silence.”
The Chief Executive Officer of Seplat Petroleum Development Company Plc, Mr. Austin Avuru, who was the keynote speaker, argued that local content without capacity building is useless.
Avuru charged the Nigerian E & P companies to adopt good corporate governance, stressing that a company that has a board that does not have powers to remove the Chairman or Chief Executive Officer does not have a board at all.
“If you have a board that can remove the CEO or Chairman when in their opinion, anyone of them is not performing, then you have a board. But if you have a symbolic Nigerian board that is answerable to the chairman’s wife or the CEO, then you have no board,” he said.
Avuru recalled that Seplat was not listed on the London Stock Exchange to source for funds but to save the company from its owners.
“The reason we listed at the London Stock Exchange was not because we were looking for money. We were looking for a platform that will force us to save the company from ourselves because the London Stock Exchange will force good corporate governance on us,” Avuru explained.
In his speech, the Managing Director of Vertex Energy, Mr. Segun Olujobi, stressed the need for a transparent, predictable and internationally competitive fiscal regime in the new PIB.
“Investments must be incentivised, even if it means that government should make money available on the table. Even if government loses money, it is okay, provided that jobs are created,” he added.
Speaking on the lessons learnt from the recent divestment by the international oil companies, the Managing Director of ND Western, Dr. Lai Fatona, stated that the acquisition of the assets by indigenous operators was a catalyst for the Nigeria oil and gas industry to grow itself.
In a related development, Neconde Energy Limited has debunked the allegation by the Gbaramatu Traditional Council, that it violated of the rights of the indigenous people of Gbaramatu Kingdom by displacing those employed at the flow stations and hijacking contracts from local contractors.
Neconde was also accused of refusing to honour an agreement to remit five per cent of its 45 per cent equity to Oil Mining Lease (OML) 42 Host Communities.
The traditional rulers also alleged that there has not been any community re-entry project since recommencement of oil exploration activities in OML 42 in 2012.
But in a statement yesterday, Neconde stated that as a joint operator of OML 42 with the Nigerian Petroleum Development Company (NPDC), it found these allegations ludicrous and a calculated attempt to arm-twist the company into abandoning its transparent operating model.
The company further clarified that it has an established model of executing “Freedom To Operate” agreements with all relevant host community groups for all projects and operational activities in its areas of operation.
Neconde added that it prides itself in local talent development and does not in any way ignore the services of local talent, especially in the host communities of its operations.
The company also described as untrue, the allegation bordering on hijacking contracts from local contractors, stressing that local contractors have been providing and continue to provide many services that are key to the operations of the company.
The company added that when its operations became epileptic due to frequent outages of both the Trans-Forcados Pipeline and the Forcados Export Terminal, it also became difficult for the JV to effectively manage some of the contracts it employs in its operation, especially the Operate and Maintain (O&M) contract, where a decision was made by the JV to manage these O&M activities directly using JV personnel.
On the allegation of non-remittance of five per cent of its 45 per cent equity to the host communities, Neconde said it was “unaware of and did not enter into any agreement with any party or parties to sell or otherwise transfer any of its equity, for any consideration whatsoever, to any party or parties. Obviously, Neconde Energy Limited cannot honor, nor should be expected to honor, an agreement that it is not privy to.
“Furthermore, it is a fact that OML 42 was one of five assets divested by the NNPC/Shell/Elf/Agip JV. Neconde Energy Limited is unaware of any other instance where this claim of entitlement to five per cent equity exists,” Neconde added.