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ABUJA NASS Demands Protection For Indigenous Contractors


National Assembly has acti­vated moves to give full ef­fect to the Nigerian Content Law in the petroleum industry with a view of empowering indigenous companies to create sustainable value in the country’s economy.

House of Representatives yesterday mandated its relevant committees on upstream petro­leum sector to pry into regulato­ry processes that alleged to have compromised the Nigerian Con­tent Law objectives with a view of re-invigorating policies and programmes that promote nation­al interest.

Following a motion by Hon. Sergius Ogun the house mandat­ed its committee on Petroleum Resources (upstream) to look into activities of regulatory authorities and demanded guided comple­tion of all unitization process of straddled oil and gas fields in the country.

Field unitization involves the choice of one operator for devel­opment of one pool of reserves that spreads across two separate oil blocks operated by two dif­ferent companies under separate production agreements with gov­ernment.

The unitization process cuts development and production costs and addresses possible dis­putes between the parties that have access to the same reserves from different operating conces­sions.

Political intervention in unit­ization, according to the law­makers, has become necessary to protect the interest of indigenous companies that might be locked in straddled fields with big multi­national giants that hold sway in the industry.

Moving the motion on the floor of the House, Hon. Ogun said that the main aim of unitiza­tion of oil and gas assets is to limit development and operations cost to one operator and also optimize value from straddled fields.

He stressed the need to make the unitization process smoother and less rancorous due to produc­tion allocation ratio and account­ing models for cost of operations.

“Due to the enormity of the resources to be relinquished by a party to the other, the utilisa­tion procedure is always volatile and rancorous between those involved, making its outcome to be in most cases inconclusive or controversial, especially when the relinquishing party is one of the international oil majors and the other an indigenous oil company.

“The regulatory authorities, such as the Department of Petro­leum Resources (DPR), National Petroleum Investments Manage­ment Services (NAPIMS), Ni­gerian Petroleum Development Company (NPDC) and Nigerian National Petroleum Cooperation (NNPC), empowered by the law to regulate the unitization proce­dure are most often helpless and do not have any definite time frame allocated to conclude the process, “Ogun said.


– Sopuruchi Onwuka and Dyepkazah Shibayan, Abuja

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