PIGB’ll Enforce Drilling Of Oil Blocks — Olorunsola
The Petroleum Industry Governance Bill will help to enforce the effective drilling of oil blocks in Nigeria and reduce the number of blocks that are not operating in the oil and gas sector, a former Director, Department of Petroleum Resources, Osten Olorunsola, has said.
According to him, the PIGB has a philosophy that insists that holders of upstream oil block licences will either drill immediately or drop them for fresh awards.
The PIGB, which has been passed by the National Assembly, is currently with President Muhammadu Buhari for his assent.
Speaking at a roundtable meeting on the Petroleum Industry Bill organised by the Nigeria Natural Resource Charter in Abuja, Olorunsola also stated that the 1993 royalty concession given to operators in the country’s deepwater operations should not have been structured the way it was.
According to him, it should have been a suspended royalty structure and not the zero royalty granted to operators in deepwater oil operations.
The former DPR boss observed that the National Assembly had created a fifth bill from the PIB to address issues of oil revenue management.
He, however, stated that the bill had been largely held back by the provisions of Nigeria’s constitution on revenue management.
Olorunsola said, “A lot of things around sharing money in our country are guided by the constitution. You can’t write any bill that will override the constitution and this is the issue.
“There are certain things we wanted to put in this bill, but there is the talk that we should go and cure that in the constitution and then come back. Countries around the world have revenue management laws, and we just have to do it because it is the right thing to do.”
He further noted that the average number of days which oil and gas companies operating from Nigeria’s oil fields have to shut down their operations on account of operational challenges is currently between 80 and 160 days.
He explained that this was unlike what obtained in other oil producing destinations across the world.
According to Olorunsola, most oil producing countries record just about 30 to 45 days of production downtime and produce oil for about 330 days.
But the case in Nigeria was different because of the frequent pipeline vandalism and uncertainties in the security of assets in the country’s oil sector, he noted.
He said, “You can imagine being in business and you can’t do anything for two years, and you have employees and you just pay them salaries for two years; you must be a generous NGO.
“In terms of real operational shutdowns, we are seeing something between 80 and 160 days, which is not good.”
He added, “There are operations around the world where production days, you can almost guarantee 330 days; you can’t do all through the year because you have scheduled maintenance and all that, but usually, it is not more than 30 to 45 days.”
The former director of the DPR stated that there was a time the Trans Forcados oil pipeline was down for two years, shutting in production from oil fields in Nigeria.
He also stated that in 2018 alone, some trunk lines were shutdown for up to 84 days, thus impeding oil production.
