Stakeholders call for the application of asset optimization clause in GDP | The Guardian Nigeria News
To avoid situations where oil assets sit idle without necessary contributions to the federation account, stakeholders tasked the federal government to enforce the drill-or-drop clause in the Petroleum Industry (GDP) Bill .
According to them, this would help the country realize the cumulative benefits of oil assets leased to operators, rather than leaving those assets idle and dormant.
While discussing the declining status of oil and gas in global energy needs over the next 20 years, industry professionals and advocacy groups, in separate interviews, task the federal government, federal lawmakers, Interest groups, operators and other industry stakeholders to wrap up – put in place the Petroleum Industry Bill (GDP) for Presidential assent so that the country can have a new applicable law that will improve investments, increase production, efficiency and transparency in the oil and gas industry
On the current controversy over the revocation of certain marginal oil field permits by the Department of Petroleum Resources (DPR) and the petition to the House of Representatives Committee on Public Petitions by Eurafric Energy Limited, one of the lease operators concerned, Mr. Ademola Adigun, an expert on oil sector governance reform, said the issue has become a test case for which the GDP must be quickly enacted because the “Drill or Drop” provision in the law will prevent abuse of process and usurpation of regulatory responsibilities or powers.
Adigun denounced a situation in which oil companies remain on mining leases for years without putting them into production capacity as “wasteful and unproductive” for a country facing serious revenue problems.
“The country borrows heavily to meet its development needs. Thus, the Nigerian government must do everything possible to use the country’s oil and gas assets to build an economy of the future, ”he added.
He said: “One of the biggest things that has happened, which is in GDP, is the idea of ’Drill or Drop’. We had a story. I think the first attempt to Nigerianize the oil and gas sector was in 1990 when the Babangida government awarded oil blocks to Nigerians who were believed to have the financial capacity to make the necessary investments. Of the reward, only three or four were taken, namely Famfa, Conoil and two others.
“Now a lot of people are getting these licenses or winning these deals and then selling them. They sell it to those who lack capacity and it all stops and we suffer as a country. We currently have two problems in the area; we have lower catches per barrel and declining crude yields. Now we are limited to 1.45 million barrels per day by the OPEC quota and unable to increase the 2.1 million barrels per day.
“If the oil blocks are fallow and people don’t produce from them, we lose income from the field, we lose opportunities for job creation, we lose what should be the contribution to GDP as well as field development costs. It’s quite a basket to have something you can’t use. So it’s better if you ditch it for other companies with the ability to explore.
On what the DPR needs to do to the new winners of the marginal fields, who fail to bring the blocks into production within a timeframe specified by the regulator, Adigun noted that the GDP had taken care of it, adding that this was the ‘one of the reasons why politicians and vested interests must put national interests above personal and sectoral interests and allow GDP to be enacted after nearly 20 years of the country’s struggle for more progressive law that solves the problems facing the oil and gas industry.
Outgoing Society of Petroleum Engineers President Joe Nwakwe said there is a clear distinction between regulation and governance, calling for caution so as not to send the wrong signal to investors due to regulatory interference .
“I did not see the comment from the House of Representatives, what I suspect is that they might draw the attention of the DPR to the court case concerning the matter. But, it is clear that the Petroleum Act gives the power to allocate and revoke blocks of oil to the Minister of Petroleum Resources and this power has been delegated to the DPR in this matter, ”he said.
His point was corroborated by Adebayo Alamutu who argued that the House of Representatives Committee on Petitions could further damage the economy and the nation’s reputation in front of investors with its usurpation of power that is not its own. .
“First, there is no controversy about it. The minister has delegated the power to award and revoke oil blocks to the DPR, which is the regulator. The DPR, on the other hand, said it had withdrawn the Dawes oil fields from Eurafric, Tako and Petralon 54 JV for lack of competence and for rendering unproductive national assets useless for many years.
“Now he has, in the best interest of the country, awarded the oil field to a company he deemed competent to make the field viable by generating income for Nigeria, and the House of Representatives will now reverse that trend?” It is not only against the precepts of the Petroleum Law, it is against development. It’s so dangerous for what we as a country preach about the division of power. It will be so scary for investors, ”he said.
Meanwhile, Eurafric Energy Limited debunked allegations regarding the revocation of the Dawes Island marginal field and the decision to award the same to Petralon 54.
Eurafric revealed that there was no pending court case on this matter, nor that delegation of authority was an issue, adding that it had produced more than 62,000 barrels of crude at the time of revocation .