The Nigerian Senate yesterday (Tuesday) passed the Deep Offshore and Inland Basin Production Sharing Contract Act 2004 (amendment) Bill 2019.
The bill was passed by the upper chamber after consideration of the report of the Joint committees on Petroleum (Upstream), Gas and Finance.
A major implication of this is that Nigeria will now be entitled to about N400 billion being revenue due from International Oil Companies (IOCs) operating in the country.
During the clause-by-clause consideration of the committee’s report, the Senate, however, amended clause 17 of the Act, which recommended 10 years for a future review of the law. On why the timeline for review of Production Sharing Contracts was amended from 5 years to 10 years, chairman of the Committee, Senator Albert Bassey Akpan, explained that the Nigerian National Petroleum Corporation (NNPC) and International oil companies bemoaned the five-year period which they said was insufficient to take certain final investment decisions.
“It takes about five years for an investor to take a Final Investment Decision oil investment (FID). So the NNPC and others are saying for you to review the law, you must give them a stable law; something they can project on”, Akpan said.
Senator Ibikunle Amosun, however, prevailed on his colleagues and moved a motion for an amendment of clause 17 to specify eight years as the timeline for the review of the Production Sharing Contracts. It was thereafter adopted by the upper chamber when put to a voice vote by the President of the Senate, Ahmad Lawan.
In his remarks, the President of the Senate said the National Assembly made history with the passage of the Bill for an amendment of Production sharing Contracts Act. He stressed that Nigeria stands to benefit N1.5 billion as a result of the amendment.
“We have done what could not be done since 2003 to date. Today marks a milestone in the history of the Senate, and particularly the National Assembly. With the passage of this bill, Nigeria will gain at least $1.5 billion in 2020 as a result of this amendment. The Senate will do more,” he said
For the IOCs doing business in Nigeria, Lawan explained that the amendment will not in any way discourage investment. “We expect that they will continue to do business in Nigeria. When we legislate at the National Assembly, we will always be mindful of the need to have a competitive environment.
“When we work on the Petroleum Industry Bill, maybe in January, we will ensure that it is a win-win situation for Nigerians and those doing business in the oil and gas industry”, Lawan added.
Chibisi Ohakah
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