Clear fiscal framework will enhance gas development in Nigeria: Kyari, NNPC GMD

*The Group Managing Director of the Nigerian National Petroleum Corporation, Malam Mele Kyari, has said investors need clarity on fiscal terms to be encouraged to commit their capital for gas development projects in the country

Alexander Davis | ConsumerConnect

In a way to encourage investors to commit their capital for gas development projects in the oil and gas sector of the economy, the Nigerian National Petroleum Corporation (NNPC) has called for a legislative framework with clear fiscal terms in order to tap the full potential of gas resources in the country’s deepwater acreages.

Malam Mele Kyari, Group Managing Director (GMD) of NNPC, made the call at a day’s public hearing on “Inclusion of Gas Terms in Production Sharing Contracts (PSCs)” organised by the House of Representatives Joint Committee on Gas Resources, Petroleum Resources (Upstream and Downstream).

Dr. Kennie Obateru, Group General Manager, Group Public Affairs Division of NNPC, in a statement Monday, March 8, 2021, quoted Malam Kyari as saying that investors needed clarity on fiscal terms to be encouraged to commit their capital for gas development projects.

According to the GMD, a functional legislative framework that provides a clear sight on how investors can recoup the capital on investment and make gains is what the Petroleum Industry Bill was all about, adding that the passage of the Bill would help resolve issues of fiscal terms in the Production Sharing Contracts (PSC).

Kyari 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 development of gas was very weak.

He noted: “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 noted, stressing that a gas pricing mechanism was urgently needed to drive gas development.

He noted that the Ministry of Petroleum Resources under the leadership of the Minister of State for Petroleum Resources, Chief Timipre Sylva, was aggressively driving gas pricing policy as part of the Federal Government’s gas commercialisation initiative.

Rt. Hon. Femi Gbajabiamila, Speaker of the House of Representatives, speaking on the occasion, dislcosed the Joint Committee on Gas and Petroleum Resources was set up in November 2019 to help resolve issues hindering the efficient development and utilization of the abundant natural resources in the country.

The public hearing was convened to enable the Committee collate the views of stakeholders for a thorough review of the statutes, Gbajabiamila said.

Hon. Nicholas Mutu, Chairman of the Joint Committee, in his address listed the mandate of the Committee to include: working with stakeholders to review the existing PSCs with a view to accommodating fiscal terms for gas; liaising with the NNPC, DPR and other relevant agencies to determine the current situation in the gas sector with the aim of proffering solutions to attract investors and grow the economy, and providing amendment to current PSCs for further legislative action.

The statement added the public hearing attracted stakeholders in the oil and gas sector including public institutions, local and international oil companies as well as civil society organisations (CSOs).