Investors are calling for clarity on fiscal terms before they can commit their capital to gas development projects across Nigeria.
Managing Director of the Nigerian National Petroleum Corporation NNPC’s Group Mele Kyari said this at a one-day public hearing on the Inclusion of Gas Terms in Production Sharing Contracts.
The hearing was organised by the House of Representatives Joint Committee on Gas and Petroleum Resources (Upstream and Downstream).
Kyari said there was the need for a legislative framework with clear fiscal terms in order to tap the full potential of the gas resources in the nation’s deepwater acreages.
He said a functional legislative framework that provides a clear sight on how investors could recoup the capital on investment and make gains was what the Petroleum Industry Bill was all about.
The NNPC boss noted that the passage of the bill would help resolve issues of fiscal terms in the Production Sharing Contracts.
He explained that the PSC agreements were focused mainly on crude oil production leaving the gas development component to the discretion of the parties, thus making the provision in PSC for the development of gas was very weak.
Kyari was quoted in a statement issued by the spokesperson of NNPC, Kennie Obateru, as saying, “The PSC simply says the parties can sit down and agree on a framework for monetising the gas on terms that are mutually acceptable.”
He said a gas pricing mechanism was urgently needed to drive gas development.
kyari noted that the Federal Ministry of Petroleum Resources was driving gas pricing policy as part of the Federal Government’s gas commercialisation initiative.
The Speaker of the House of Representative, Femi Gbajabiamila, said the Joint Committee on Gas and Petroleum Resources was set up in November 2019 to help resolve issues hindering the efficient development and utilisation of the abundant natural resources across the country.
He said the public hearing was convened to enable the committee to collate the views of stakeholders for a thorough review of the statutes.
The chairman of the joint committee, Nicholas Mutu, outlined the mandates of his team to include working with stakeholders to review the existing PSCs with a view to accommodating fiscal terms for gas, among others.
The Minister of State for Petroleum Resources, Timipre Sylva, said the Federal Government was pushing gas penetration into rural communities, noting that the country was billed to record significant economic growth from exploring its gas resources.