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Delay review of PSC act stalls investment in oil sector ― Sylva

*as lawan assures passage of PIGB next year
*insists review of PSC Act a done deal

Minister of Petroleum Resources, Timpre Sylva has said reviewing the deep offshore and Inland Basin Production Sharing Contract Act 2004 to meet current economic realities in the sector would boost investments and production in the Nigerian oil industry.

Sylva said this while appearing before the public hearing on the deep offshore and Inland Basin Production Sharing Contract Act 2004 by the Senate joint committee on Petroleum Upstream, Finance, Judiciary and Gas on Monday in Abuja.

According to him, the nation has only made an increase of 500 million barrels between 2007 and 2019 which he considered dismal for an industry with a huge investment opportunity.

The minister stated: “From 1999 to about 2007, we grew our production from about 22.5 million barrels to about 37 billion Barrels, you can see that there was an exponential growth in that period of 1999 – 2007.

“Since 2007 to 2019 our reserves stands at 37.5 million barrels. That means that we have grown a reserve within a period of about 12 years by just 500 million barrels.

“If you compare it with the growth between 1999-2007 you know that the only thing that is different was that there is a clear regulatory environment and between 2007 and now, there has been quite unclear because of the regulatory of the laws to govern the oil industry.

“I am happy today that there is a growing national consensus that we must clear the regulatory environment in the oil industry.

“The National Assembly is on the same page with the executive and I hope that with this engagement with the industry, even the industry will be on the same page with the National Assembly and the executive.

“As we come together, we will have a law that will be to the overall interest of all of us as a country and industry players,” Timpre stated.

Addressing the stakeholders at the public hearing Nigerian Senate assured stakeholders in the oil sector that the focus of the national assembly in reviewing the production sharing contract (PSC) Act was to meet the current national economic reality that would be done in the best interest of all stakeholder.

He said the review of the deal is a done deal as there was nothing in the deal that was untoward for any of the stakeholders.

Lawan in his remark at the opening ceremony of the stakeholders meeting with representatives of oil majors, state government and other oil sector players assured the industry players that the 9th Assembly will pass the Petroleum Industry Bill to expand investment in the sector.

Re-echoing the view of the President of the Senate, Chairman, Senate Committee on Petroleum Upstream, Bassey Akpan said the there is a consensus on the need to grow the industry both by the government and investors.

He said part of the steps to make for an enabling environment would be to tweak the Production sharing Act which has become obsolete by its own provision following the proviso for a review after 15 years or higher price for a benchmark of $20 per barrel which now prevails.

He said the nation was not unmindful of the losses it has incurred due to the delayed activation of the proviso and negotiate with the oil companies to have her fair share.

According to him, the outcome of the review will be a win situation for all stakeholders as it will lead to the expansion of the sector and drive investments.

The Senate had on Wednesday, October Second directed its Committees on Petroleum Upstream, Finance, Gas and Judiciary to meet with stakeholders and correct the legal anomaly inherent in the law thereby denying the nation her economic benefits.

The decision of the Senate was predicated on the motion of by Senate Committee Chairman on Petroleum Upstream, Senator Akpan Bassey at plenary a forth night ago urging the senate to amend the law to enable the nation to harness her fair share accruing to about N350 million.

Bassey in the bill urgent need to review and recover additional revenue accruable to the government of the Federation from the Production Sharing Contracts pursuant to Section 16 of the Deep Offshore and Inland Basin Production Sharing Contract Act CAP D3 LFN 2004 and amend the Extant Act.

The Akwa Ibom Nort-East Senator told the senate in the motion that up till date, the PSC Act has not been reviewed and/or amended to ensure that government derives maximum and equitable benefits from the PSCs as provided in the Act.

According to the motion as a result of the “non-review and amendment of the PSC Act, the Federal Government has lost about US$21 billion (about N7trillion) over a period of 20 years due to the failure to review and amend the PSC Act.”

He noted that Nigeria: “having lost trillions of naira due to non-review of the PSC Act, stand to gain an additional sum above 30billion naira monthly (360billion annually) if the Act is reviewed and amended which would boost our revenue base significantly.”