THE Senate has introduced new ways of doing business and managing Nigeria’s oil resources to enhance openness and transparency in the industry.
After a scrutiny of the recommendation of its Committee on Petroleum Resources that worked on the Petroleum Industry Bill (PIB), the Senate endorsed the proposal that a new system of acreage management, licensing, and leasing be introduced in the sector.
Consequently, the Upper House inserted Clause 195 in part three of the PIB, which states that the National Petroleum Inspectorate, to be established under the planned law, will adopt a national grid system for petroleum acreage management.
According to the panel, “the basic unit for the national grid shall be a parcel of two-by-two kilometres, subject to adjustment zones and the national boundary, in which case a parcel shall be the part in the adjustment zone or on Nigerian territory.”
The Senate had last Wednesday considered the bill but suspended action on it because of the one-month break to enable its members go on campaigns for the 2011 elections.
A principal officer of the Senate told The Guardian in Abuja that the chamber would pass the bill as soon as it reconvenes in April.
He said: “Our Committees on Petroleum (Upstream and Downstream) have worked on the bill and brought a report, which we have adopted, so we will have no problem passing the bill.”
The clause further provides that the grid system shall also be used for the definition of licence and lease areas. “The grid system shall be used for the definition of licence and lease areas, relinquishments, bid procedures, identification of well locations, petroleum conservation measures and such other regulatory and acreage management procedures as are applicable in the opinion of the inspectorate.”
On classification of licences and leases, the proposed law says: “There shall be the following licences or leases - (a) a licence to be known as petroleum exploration licence to carry out exploration on a non-exclusive basis, (b) a licence to be known as Petroleum Prospecting Licence (PPL) to prospect for petroleum, and (c) a lease to be known as Petroleum Mining Lease (PML), to search for, win, work, carry away and dispose off petroleum.”
The clause also defines the process of issuance of licence and lease thus: “In accordance with the provisions of this Act and with respect to acreage vested in the commission and subject to the approval of the President, the minister on the recommendation of the commission, may grant a Petroleum Prospecting Licence or Petroleum Mining Lease and where the commission decides to grant such licence or lease, (a) it shall be to the winning bidder pursuant to bid process prescribed in section 214, provided the bid winner has complied with all requirements specified in the bid process.”
On the issue of confidentiality clause, section 198, which the Senate panel included, provides that “subject to the provision in subsection (3) of this Act or the provisions of any other relevant law, confidentiality clauses or other clauses contained within any licences, leases, agreements or contracts for upstream petroleum operations that are for the purpose of preventing access to information and documents by third parties in respect of any payments of (a) royalties and (b) fees and bonuses of whatever sort, shall be null, void and of no effect.’’
The bill restricts a petroleum exploration licence to a period of three years. “A petroleum exploration licence shall be for not more than three years and shall not include any right or option to win, get, work, store, carry away, transport, export or otherwise treat petroleum discovered in or under the said area.”
The bill defines the duration and area of petroleum prospecting licence in clause 200 as “a petroleum prospecting licence shall be (a) with respect to onshore and shallow water areas, for a duration of not more than seven years consisting of an initial period of three years, a renewal of two years and a possibility for appraisal of any discoveries until the termination of the licence or such later period as may be granted by the Inspectorate following due representation of lease and the initial petroleum prospecting licence area shall not be more than 500 square kilometres and not to be one parcel and (b) with respect to deep water areas and inland basins for a duration of not more than 10 years, consisting of an initial period of five years, a renewal of three years and a possibility for appraisal of any discoveries until the termination of the licence and the initial petroleum prospecting licence area shall not be more than 1,000 square kilometres and not less than one parcel.”
Clause 207 of the bill approved by the Senate panel requires all existing and future petroleum-mining lessees to comply with the new and future gas obligations in the country. “All existing and future mining lessees shall comply with the domestic gas supply obligations during such periods that the Inspectorate has determined that lessees shall supply the domestic market for such periods of time and in such manner as the Inspectorate may determine.”
The clause adds that where a petroleum mining is not put to productive use within five years from the date it was granted, it would be revoked.
The Chairman of the Senate Committee on Petroleum (Upstream) Lee Maeba, who presented the report to the Senate within the week, said the Senate would have no problem passing the bill ‘’because our committees have done a thorough job on it and the nation desires to have an oil industry where Nigerians could play their expected roles’’.
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