Uncertainities Over PIB May Affect OPEC Quota In Nigeria

Nigerian Minister of Petroleum Resources Diezani Alison-Madueke is the subject of controversy resulting from a probe into the fuel subsidy crisis in the oil-producing West African state. Protests over the cancellation of subsidies erupted in 2012., a photo by Pan-African News Wire File Photos on Flickr.

Uncertainties over PIB may affect OPEC quota

MONDAY, 06 MAY 2013 20:48
FROM ROSELINE OKERE, HOUSTON, TEXAS
Nigerian Guardian

THE Petroleum Technology Association of Nigeria (PETAN) has said the non-passage and the divided interest in the Petroleum Industry Bill (PIB) may lead to further reduction in the country’s crude oil reserve.

The Chairman of PETAN, Emeka Ene, in an interview with journalists Monday at the of Offshore Technology Conference (OTC) in Houston, Texas, said crude oil reserve has been on the decline in the past few years due to reduction in the flow of investments in the country’s oil and gas sector, adding that it may lead to the country’s inability to seek for higher Organisation of Petroleum Exporting Countries (OPEC) quota.

The Department of Petroleum Resources (DPR) had raised the alarm over the declining rate of country’s crude oil reserves, saying it has dropped by 1.6 billion barrels (about 4.79 per cent) in just one year.

Ene attributed the drop to declining exploration activities and lack of interest in the oil and gas sector by investors due to the uncertainty surrounding the PIB.

He said: “If you look at the net oil reserve in the country, for the first time, it has started to decline. If the oil reserve is on the decline today, what are we going to produce in the future? The oil reserve is also a tool to negotiate OPEC quota, if the oil reserve is declining, it is going to be extremely difficult to make case for higher OPEC quota and it will affect oil revenue to the country. It is our interest to have the PIB passed. What we are saying is that there is need to pass the PIB that addresses the concerns of short and long term investors in the oil and gas sector. It is not just about passing the PIB alone, but a PIB that would encourage investment in the oil and gas sector”.

He stressed the need for the Federal Government and international oil companies operating in the country to strike a balance and come out with a PIB that would encourage investment in the oil and gas sector.

Ene stated: “The PIB is like setting the rules of the game. All stakeholders recognize the need to have the rules set straight and the PIB is set to achieve that. The PIB tries to set a clear structure for operations in the oil and gas industry taking into considerations that there are laws that are decades old, which are no longer applicable in the oil and gas industry of today. Every stakeholder in the industry recognize the need for the PIB. It is inevitable that the interest of different stakeholders will conflict. There has been some issues concerning investors taking investment decisions in some projects due to the PIB.

He said: The reason is that some investors want to understand the PIB. The association has found itself on the side of IOCs and the government. PETAN by holding the PIB workshop is to bring the stakeholders to the table and discuss on the need to have the PIB so as to attract long term investment.

Ene identified under utilization of capacity and lack of access to finance as some of the challenges militating against the country’s oil and gas sector.

He explained: “The challenge has always been to create a level playing field for Nigerian companies. The Nigerian content policy stands to address that. We want to build skills, technical time.