The recent statement accredited to the newly elected speaker of the 8th National Assembly, Hon. Yakubu Dogara where he stated in a meeting with the British High Commission that the House would revisit the petroleum industry bill is one that has rekindled hope in the minds of petroleum industry enthusiasts as it seems the problem of non-utilization of gas is gradually coming to an end
The Petroleum Industry Bill (PIB) is a modern all-rounder bill currently in the National Assembly which is hoped to revolutionize the Nigerian petroleum sphere with key provisions such as a total overhaul of the Nigerian petroleum taxation system, improving transparency in the award of licenses and leases, the introduction of the infrastructure joint ventures, reducing government participation in the sector and deregulating the petroleum sector, improved environmental regulation and other salient provisions.
However, one of the most key and interesting areas of the PIB is its particular interest towards improving the gas industry. Gas (Natural or Associated) is a hydrocarbon which is either found in association with crude oil at the well heads or drilled from the earth’s is tipped as the world’s next fuel by 2025, with Nigeria’s huge deposits 187Tcf of proven natural gas reserves makes her the country with the 9th largest gas reserves globally and the largest in Africa with an additional potential to develop its gas reserves to 600Tcf and therefore become the country with the 4th largest gas reserves in the world. Gas can be used for electricity (Wellhead to Wire), fertilizers, cooking gas, re-injected to preserve and improve oil wells or exported for financial gains.
The PIB provides that a license or lease for the production of oil and gas whether onshore or offshore shall not be granted to any applicant unless the application for such license or lease is accompanied by a comprehensive gas utilization or re-injection which shall be in consonance with the Nigeria Gas Master Plan, Domestic Gas Supply Obligation and other gas policies made in respect of the gas sector from time to time.
Section 247 of the bill also provides that “The Inspectorate shall take such measures as appropriate to create franchise areas for gas processing facilities in Nigeria to support the National Gas Master Plan”. The PIB also seeks to create nine sub agencies unbundling the Department of Petroleum Resources in charge of specific duties such as the Upstream Petroleum Inspectorate (UPI), and the Downstream Petroleum Resources Agency (DPRA). The PIB still retains power to make regulations on gas matters with the Minister; however the UPI and DPRA would be entrusted with the role of regulating the gas industry in accordance with the NGMP, the PIB and other relevant policies of the federal government. Thus, while the UPI would be regulating the domestic utilization plans and monitoring gas flare measurement, it would also work with the DPRA in implementing the Gas Management Model by ensuring the balanced growth of domestic gas projects.
As regards prohibition of gas flaring, sections 252 and 253 of the bill prohibits gas flaring except where the minister grants a permit of not more than 100 days in such cases where there is prove of start-up, equipment failure, shut down, safety flaring or due to inability of gas customer to off-take. Section 253(1)(C) provides for the penalty which shall not lesser than the value of gas flared.
Another laudable addition to the PIB by its section 255 is the introduction of the flaring measurement and reporting programs which provides that the volume of gas flared shall be measure using the metering equipment specified by the inspectorate and which shall be installed by companies in their gas facilities. The PIB also empowers individuals and communities to lodge reports of companies faulting the gas regulations and to enforce the regulations if properly empowered.
The PIB has to be applauded for its bold attempt towards improving gas utilization in the country with its salient provisions but its deadline date of December 2012 (which has already passed by) is one that should be abrogated as it follows the unfortunate of unrealistic deadline dates set by laws such as the Associated gas re-injection act, the bill should prohibit gas flaring strictu-sensu and not set unrealistic deadlines.
After years of policy and regulatory abandonment, the federal government is finally viewing the gas industry from the viewpoint of the international community and has acted well through regulatory improvements in the PIB, the question remains; how far can the PIB go in re-structuring and turning around the fortunes of the Nigerian gas industry.
Odoemenam Chidiebere is a final year undergraduate law student at the University of Nigeria Enugu Campus.
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