NNPC advocates split of petroleum licences into components

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17 May 2018, Lagos — The Nigerian National Petroleum Corporation (NNPC) has called for a split of petroleum licenses into two components to prevent perpetual ownership of oil acreages.

In a presentation at the Public Hearing organised by the House of Representatives Committee on the Petroleum Industry Administrative Bill (PIAB), Petroleum Industry Fiscal Bill (PIFB) and the Petroleum Industry Host Community Bill (PIHCB), Group Managing Director of the NNPC, Dr. Maikanti Baru, recommended the splitting of the licences into two components for prospecting and production phases.

The issue is under the draft Petroleum Industry Administrative legislation, which along with the Bills are currently before the National Assembly.

Baru declared that the proposed split would prevent a situation where operators would sit perpetually on oil acreages.

The NNPC’s recommendation under the PIAB, according to Baru, seeks a break up of Petroleum Licence into Petroleum Exploration Licence (PEL) – to prospect for petroleum, while the second component to be known as Petroleum Lease (PL), should be created to cover the production phase to search for, win, work, carry away and dispose of petroleum.

The corporation also pushed for a re-think of the duration of licences as proposed in the PIAB which stipulates initial duration of 25 years for onshore and shallow water petroleum licence and 30 years for deep water and frontier acreages.

NNPC proposed five years prospecting licence for onshore and shallow fields and a duration of 10 years for deep offshore and frontier basins.

It also recommended 20 years production lease for onshore and shallow fields as well as deep offshore and frontier basins.

The NNPC insisted that the that only the production lease period should be renewed for a period not exceeding 20 years.

On the PIFB version of the proposed oil industry law, NNPC recommended a three-stage licences regime consisting of: Exploration Licence (EL) – to explore for petroleum on a non-exclusive basis; Petroleum Exploration Licence (PEL) – to prospect for petroleum on exclusive basis; and Petroleum Lease (PL) – to search for, win, work, carry away and dispose of petroleum.

Beyond the clause by clause recommendations, the corporation also advocated for the simplification of the fiscal system for ease of implementation and to ensure progressivity.

It called for expunging all regulatory issues out of the draft legislation to empower the Commission to regulate the industry effectively.

NNPC highlighted the need to introduce and provide clauses that will ensure easy review of provisions of the bill in response to economic, technical and other considerations while disallowing legislation on issues bordering on contracts.

Chairman of the House Committee, Honorable Abdulrazak Namdas, thanked the NNPC for its contribution, noting that the committee would sift through all the submissions by stakeholders before taken informed decisions on the issues.

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Samson Gbenga Salau [Editorial Board Adviser] Gbenga Samuel Salau is a professional journalist with over 17 years experience in journalism, he is a graduate of Communication and Language Arts, University of Ibadan. On completion of his youth service, he joined The Guardian as a freelance journalist and was later absorbed as a staff. While in the University, he was a campus journalist reporting for the Independence Hall and Faculty of Arts Press Clubs. As a campus journalist, he won the following awards; Independence Hall Press Best News writer; University of Ibadan Union of Campus Journalists’ Best News Reporter/Writer; First Runner-up, Reuben Abati Award for Investigative Journalism; Association of Faculty of Arts Students’ Press Best Reporter; University of Ibadan Union of Campus Journalists’ Best Political Writer; Winner, Reuben Abati Award for Investigative Journalism, and University of Ibadan Union of Campus Journalists’ Best Interviewer. He served the Association of Communication and Language Arts Students, as the Public Relation Officer, the same year he was appointed the News Editor of the Association of Faculty of Arts Students Press. The following session, he was made the General Editor, and a member of the 13-man University of Ibadan Students’ Union Transition Committee. As a reporter in The Guardian, in 2014, he won the Promasidor Quill Award Best Report on Nutrition and DAME Business Reporting category. In the 2015 edition of the Promasidor Quill Award, he won the best Report on Nutrition and Brand Advocate Categories, while in 2016, he won the NMMA Print Journalist of the Year, first runner-up Golden Pen Reporter of the Year and SERAs CSR Awards. Gbenga Salau loves traveling, reading, and listening to songs with good lyrics no matter the genre.

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