…Oil firms suspend operations as PIB passes second reading in Senate
Barely a few hours after the dialogue between President Muhammadu Buhari and critical stakeholders of the Niger Delta to resolve the crisis in the region, unrepentant militants Tuesday night bombed the Trans Forcados Pipeline (TFP) owned by the Nigerian Petroleum Development Company (NPDC) in Batan community in Warri South West Local Government Area of Delta State.
The latest attack on the facility owned by exploration and production subsidiary of the Nigerian National Petroleum Corporation (NNPC) forced some oil companies in the western Niger Delta that evacuate crude oil through the pipeline to suspend operations.
THISDAY report that the breach of the pipeline occurred at night, resulting in a huge fire that enveloped the site of the attack.
“Suspected militants attacked the NPDC pipeline in Batan with dynamites. As I am speaking, the place is engulfed with fire but efforts are being made to put it out,” a community source said.
Another the community source confirmed the incident, stating that they heard a huge explosion in the early hours of yesterday only to discover it was a pipeline belonging to NPDC that had been attacked.
“We heard a huge explosion. As usual, when we came out, we discovered that the pipeline had been attacked again. We are not sure whether it was militants that caused it or not,” he said.
No group has claimed responsibility for the attack.
“The attack was carried out with the aid of dynamite and it is coming less than 48 hours after the resumption of operations at the flow station,” a security official, who declined to be named, told AFP.
The pipeline was attacked in July and had only resumed operation at the weekend following repairs.
Security sources disclosed yesterday that the latest attack by suspected militants might be as a result of the commencement of repair work on the pipeline while negotiations are still ongoing between the Niger Delta leaders and the federal government.
“You know that they have always warned that no repairs should be carried out on any of the breached oil pipelines. Maybe they are angry that repairs had commenced and resorted to the attack,” a military officer told THISDAY.
A security agent, however, had a contrary view stating that illegal oil bunkerers had deployed a new tactic of engaging militants to breach pipelines to divert the attention of security agents from their illegal acts of siphoning crude from pipelines and oil well heads.
“I think that is what happened with the Batan attack yesterday. While the security agents are concentrating on searching for the perpetrators of the attacks, less attention will be given to the activities of the illegal oil bunkerers,” he said.
An Ijaw leader and chairman of the oil-rich Kokodiagbene community, Gbaramatu Kingdom in Warri South West Local Government Area, Mr. Sheriff Mulade, confirmed the attack on the pipelined but condemned the action, saying that there was no justification for it.
“I heard about the attack. I condemn it. We peace loving Ijaws condemn it because the federal government has opened dialogue with our leaders. So what excuse do they have for that attack?” he asked.
Another community leader, Austin Ozobo, also confirmed the attack but said it might have been a reaction to a comment credited to President Buhari during the dialogue with leaders of the region on Tuesday.
The president had said that those who are displeased with Nigeria should go to another country, but this was mainly played down by most of the press.
The spokesman of Joint Task Force (JTF) in the Niger Delta, Lieutenant Colonel Olaolu Marcellinus Daudu, was silent on the attack, while the commander of Nigerian Navy Ship (NNS) Delta, Commodore Joseph Dwunze, could not be reached for confirmation, as an aide said he was busy at the time THISDAY called his line.
Since February, several militant groups have attacked oil facilities, slashing the nation’s output and hammering revenues.
The groups claim to be seeking a fairer share of Nigeria’s multi-billion-dollar oil wealth for residents of the region — as well as greater political autonomy.
Following peace talks in Abuja chaired Tuesday by the president, the Minister of State for Petroleum, Dr. Ibe Emmanuel Kachikwu, had said the country’s oil production was returning to normal.
“The reality is that as of today and this morning, we are at 2.1 million barrels production. That’s substantial,” he said, adding that efforts to secure peace were succeeding.
Nigeria normally produces around 2.2 million barrels per day (bpd), but output dropped to a low of 1.4 bpd this year due to rebel attacks.
Oil Firms Suspend Operations
Following yesterday’s attack on the pipeline, some oil companies in the western Niger Delta that evacuate crude oil through the pipeline were forced to suspend operations.
The Trans Forcados Pipeline is the major trunk line within the Forcados oil pipeline system, the second largest network in the Niger Delta, which receives other pipelines from onshore oil fields and feeds the Forcados export terminal.
The Forcados export terminal owned by Shell Petroleum Development Company (SPDC), which also operates the Trans Forcados Pipeline, has an oil export capacity of 400,000 barrels per day.
Crude is delivered to offshore loading berths for export through a 31km 48-inch subsea pipeline, which was recently repaired after it was damaged in February by the Niger Delta Avengers (NDA), the militant group that has claimed responsibility for most of the attacks on oil facilities in the region.
Apart from Shell and NPDC, other companies that rely on the Trans Forcados Pipeline include Seplat Petroleum Development Company Plc, Neconde, and First Hydrocarbon Nigeria (FHN).
THISDAY gathered that some marginal field producers such as Pillar Oil, Midwestern Oil and Gas, Platform Petroleum and Energia also convey their crude oil through the pipeline.
A top official of one of the companies, who spoke to THISDAY off the record, confirmed the breach on the pipeline, saying it had affected the operations of some of the companies.
“Some of us were affected by the breach on a section of the pipeline. Some of us rely on that section of the pipeline to take our crude to the export terminal. We have been down since yesterday (Tuesday),” one of the officials told THISDAY.
A spokesman of Shell Nigeria, Mr. Precious Okolobo, declined to comment on the incident when contacted by THISDAY.
PIB Passes Second Reading
But with the Niger Delta still reeling from militant attacks, the Petroleum Industry Bill (PIB), which will set out new reform measures for oil and gas operations in the country, scaled its second reading in the Senate yesterday, after it had suffered several months of inactivity in the federal legislature.
It was later referred to the Joint Committee on Petroleum (Upstream, Downstream) and Gas. The committee has four weeks to return the bill to the Senate for passage.
Re-christened the Petroleum Industry (Governance) Bill, the bill is introducing some reform measures aimed at enhancing the effective regulation of the oil sector.
Leading the debate on the bill, Senate Committee Chairman on Petroleum (Upstream), Senator Tayo Alasoadura, said whereas the bill was first introduced in 2008 in the National Assembly, several efforts made to pass it by the sixth and seventh Senate fell through.
According to him, the persistent failure to pass the bill had had adverse effects on the petroleum industry in Nigeria, thus “keeping the country’s future in limbo and denying Nigeria the unique competitive edge as an oil and gas leader in sub-Saharan Africa”.
Alasoadura explained that the eighth National Assembly had adopted a new strategy towards enhancing the effectiveness of the bill. According to him, the bill had been broken into smaller pieces to enhance expeditious treatment of certain elements and consequently make future amendments easier.
Describing the bill as the first in a series of such bills meant “to reform and reposition the Nigerian oil and gas industry for sustainable growth”, Alasoadura said subsequent bills would focus on upstream, downstream, fiscal, gas administration matters and revenue management.
He listed the objectives of the bill to include: The creation of efficient and effective institutions with clear and separate roles for the petroleum industry, as well as establishing a network for the creation of commercially-oriented and profit-driven petroleum entities that will add value and comply with international standards.
Furthermore, he said the bill would promote transparency and accountability in the administration of the petroleum resources in Nigeria and simultaneously create a conducive business environment for petroleum industry operations.
He also said given the state of the petroleum industry in the country, it had become pertinent to institute some urgent reforms in the governance and institutional structure in the petroleum sector, adding that a major flaw of the extant laws on the sector was the lack of clarity of roles and self-regulation, conflicts and unnecessary overlaps.
He then proceeded to list such flaws and overlaps in the extant laws: “The Minister of Petroleum Resources is in charge of the Ministry of Petroleum Resources, and indirectly supervises the Department of Petroleum Resources (DPR), a body which is supposed to be an independent regulator; he is also the chairman of the Board of the Nigerian National Petroleum Corporation (NNPC) by law.
“The lack of clear separation of government roles in the industry has hindered competition, and given ample room for sustained failures in governance and performance.
“In addition, and in particular, the country is being robbed of huge revenues as a result of mismanagement of the NNPC, bearing in mind the intrusive control of the government in the affairs of the corporation, the confusion with the regulator as well as funding difficulties.
“These lost revenues are needed primarily to grow the sector, improve government revenues, as well as support the much talked about diversification of the economy.
“This bill seeks to cure all these, having anchored the work on three governance and control parameters – industry structure, institutional mandates and institutional governance.”
He observed that in the renewed efforts to refocus and renew the petroleum industry, certain principles had been drawn to guide the overall framework.
He highlighted such principles to include: “Clear delineation of government roles and responsibilities across the industry,” which he said would involve policy formulation, regulatory oversight and commercial operations; a simple and lean structure that is devoid of unnecessary overlaps; the creation of a single strong industry regulator; and unbundling of the existing NNPC to two commercial entities that will be limited by shares, ensuring strong governance, transparency and accountability in all institutions.
He also said the bill named the two entities that NNPC had been broken into as the National Petroleum Company and National Assets Management Company and then proceeded to enumerate the key institutions created by the bill, their managers and their responsibilities.
“Based on these principles, the institutions proposed in this bill are as follows: (a) The minister, who shall be responsible for policy formulation and supervision of the affairs of the petroleum industry on behalf of the federal government.
“The Petroleum Regulatory Commission shall be the industry regulator and watchdog, responsible for licensing, monitoring, and the supervision of petroleum operations, enforcing laws, regulations and standards across the value chain.
“The National Petroleum Company, which will operate as a commercial entity, in order to ensure efficiency across the value chain. The National Assets Management Company, which shall ensure maximum value for the federation through prudent management of the federation’s oil and gas investments in assets where government is relieved of upfront funding obligations otherwise known as cash calls. For example, PSC assets.
“These institutions constitute the key structures necessary to assure effective governance and efficiency of the petroleum industry,” he explained.
The senator further noted that splitting the bill would enhance the commercial focus, performance, transparency and accountability and also provide the basis “for a lasting solution to the perennial funding incapacity of the NNPC”.
The senator also listed the benefits to include turning the entities into smaller, manageable agencies that would reduce running cost, ensure focus on strategic interests and cost management, among others.
In his contribution, Senator Barnabas Gemade (Benue North-east) hailed the split of petroleum agencies in the bill, saying it would reveal the true picture of the entire petroleum industry and also promote corporate best practices.
Gemade also described the bill as timely, pointing out that it presents the modus operandi for the regulation of the petroleum sector in accordance with international standards.
Also supporting the bill, Senator James Manager (Delta South) described it as a robust and focused framework, but expressed concern that the bill was silent on the wellbeing of the host communities.
According to him, addressing the interests of the host communities would serve as impetus for peace and stability in the Niger Delta, arguing that progress can only be achieved in the region when the atmosphere is peaceful.
Senate President Bukola Saraki, in his remarks, said the Senate was committed to creating the right environment for the operations of the petroleum sector.
He also responded to the issue of host community raised by Manager, explaining that the bill focused mainly on governance of the petroleum sector, adding that other matters bordering on the interests of host communities would be referred for further discussions that would result in the best way to tackle it.
“Clearly what we have done here is really to make us to move forward in this important bill; to see that after so many years, we finally pass this Petroleum Industry Bill.
“And that is why it has been put into different sections. But I want to give a commitment on behalf of our colleagues that this one is just on the issue of governance.
“Before we proceed into the finalisation of this part of the bill, the committee must come with a bill regarding the issue of the host communities for discussion and I think that can be done within the next four weeks before we come back for consideration of clause by clause.
“We must bring the bill here on community issues, so that we can also pass it in a second reading and commit it to the committee.
“It would be fair to create an understanding that the purpose of this bill is to send the message that truly, as a Senate, we are committed to ensuring that we create that enabling environment for this sector.
“We can only do it in an environment of peace. So we will put it that while this bill is being referred to the Committees of Petroleum Upstream, Downstream and Gas, and being expected back in four weeks, we want to have the bill for the consideration of the issue of the oil bearing communities and also things like the fiscal issues within four weeks time,”Saraki said.
