The passage of the Petroleum Industry Bill (PIB) will help resolve issues of fiscal terms in the Production Sharing Contracts (PSC), the Group Managing Director of NNPC, Mallam Mele Kyari, said in Abuja on Monday.
Persecondnews recalls that the bill is currently before the National Assembly with a cast iron assurance of its passage before June.
He said a functional legislative framework would state in clear terms how investors can recoup their investment in the industry.
Kyari spoke at a one-day public hearing on “Inclusion of Gas Terms in Production Sharing Contracts (PSCs)” organized by the House of Representatives Joint Committee on Gas Resources, Petroleum Resources (Upstream and Downstream).
He explained that the PSC agreements were focused mainly on crude oil production leaving the gas development component to the discretion of the parties thus making the provision in PSC for development of gas was very weak.
“The PSC simply says the parties can sit down and agree on a framework for monetizing the gas on terms that are mutually acceptable,” Kyari said in a press statement by the Group General Manager, Group Public Affairs of the Nigeria National Petroleum Corporation, Dr Kennie Obateru, a copy of which was given to Persecondnews.
According to him, a gas pricing mechanism is urgently needed to drive gas development and tap its full potential in the nation’s deepwater acreages.
“Investors need clarity on fiscal terms to be encouraged to commit their capital into gas development projects.”
Kyari noted that the Ministry of Petroleum Resources under the leadership of the Minister of State for Petroleum Resources, Chief Timipre Sylva, was aggressively driving gas pricing policy as part of the Federal Government’s gas commercialization initiative.
Earlier, the Speaker of the House of Representatives, Mr Femi Gbajabiamila, said the Joint Committee on Gas and Petroleum Resources was set up in November 2019 to resolve issues hindering efficient development and utilization of the abundant natural resources in the country.
He said the public hearing was convened to enable the Committee collate the views of stakeholders for a thorough review of the existing laws.
In his address, the Chairman of the Joint Committee, Mr Nicholas Mutu, listed the mandate of the Committee to include working with stakeholders to review the existing PSCs with a view to accommodating fiscal terms for gas.
It also include liaising with the NNPC, DPR and other relevant agencies to determine the current situation in the gas sector with the aim of proffering solutions to attract investors and grow the economy, and providing amendment to current PSCs for further legislative action.
The public hearing was attended by key stakeholders in the oil and gas sector including public institutions, local and international oil companies and civil society organizations.