Senator Gershom Bassey (Cross-River South) is the vice chairman, Senate Committee on Petroleum Resources (Downstream). He spoke on issues affecting the oil industry at the sidelines of the 35th Annual Conference and Exhibition of Nigerian Association of Petroleum Explorationists (NAPE), recently held in Lagos and co-sponsored by Total Exploration and Production Nigeria (TEPNG). DAPO FALADE brings excerpts.
The National Assembly recently approved $45 as the benchmark for the 2018 Budget. As the vice chairman, Senate Committee on Petroleum Resources (Downstream), do you see the approved benchmark as being realistic?
You mean in the MTEF?
Yes…
Yes, I think so. I think today, oil is about $62 per barrel and you will realize that about one year ago, it was $30 per barrel. So, normally when you are budgeting, you don’t take the extreme high and you don’t take the extreme low; you take the average and $45 seems to be a good average. Considering that the trend for oil pricing is going up, oil prices may hit $80-$90 a barrel. So, with an upward trend in oil prices, a $45 benchmark is conservative and you know, for budgeting, you take conservative figures; you don’t over-estimate. So, $45 is very conservative and a very budget-friendly figure.
But I thought you will be more concerned with the production level, rather than the price. It is the production level that we will have to work on because the 2018 Budget is based on 2.3 million barrels per day. We have never hit such a figure before, the highest so far being 2.2 million barrels per day. So, it is an optimistic projection, but then again, it is something the oil companies have said they can reach. In fact, they have talked of higher levels, particularly when you consider the deals that have been struck on the cash crows is based on higher oil production and we believe that, with that motivation, the production level will go up. And, of course, now with the issues in the Niger Delta, especially hopefully with the passage of the PIB Host Community Bill and the discussions between the presidency and the host communities and the new approach to a lot of these issues, we expect that there would be a higher level of peace in the Niger Delta which will ensure a higher production figures. But we are still watching very carefully, the production levels.
On the issue of adding value to our crude, what is the level of production? Do you think we can refine locally for export in order to boost the revenue base of the country?
I cannot speak for my colleagues in the Senate, but I can speak for myself. Left to me, Nigeria should not be exporting any raw materials; it does not make any sense. In a modern economy, we should be adding value to every single thing we produce, not just oil. These include cocoa, palm oil and every other thing. We should not be talking about how many barrels of oil a day we export; we should not be talking about how many tons of cocoa we export. I mean, those are things that we should be talking about, some 60 years ago. But they conform any longer to the economic realities of today. In that sense, I applaud the efforts to refine, in-house, as much of our crude oil as possible and to create a brandnew petro-chemical industry because these are the things that we need in order to add value to our raw material, which is crude oil. So, we should, as much as possible, be adding values to our raw materials, generally.
In that case, do you support the idea of having more modular refineries in the country?
Of course, yes. We should add values: whatever it takes to add value; whether it is refining; whether it is petro-chemical industry, whatever it is that adds value to crude oil, even unto gas is what I will support. I recognise that right now, we cannot do that immediately, but that should be the aspiration.
The country has been bogged down by the failure of the National Assembly to pass the Petroleum Industry Bill (PIB), even with many Nigerians ascribing the noticeable lapses in the oil sector to this. What is the update on the PIB issue?
There have been a lot of problems in the oil and gas industry, particularly with the governance issues in the industry. These are issues that are not new; these are issues that all the players in the industry clearly recognise and our mandate in the eighth National Assembly has been to see what we can do to contribute our quota towards setting the oil industry along the right path. We recognize that the PIB has been in the pipeline for several years, but that mandate was clear: let us finally bring to an end, the issue of PIB.
So, as soon as the eight National assembly came in, our leadership, headed by the Senate President, Bukola Sataki, gave us the marching order, as the Petroleum Downstream Committee, along with the other two oil and gas committees, namely, the gas committee and the petroleum downstream committee, and it was very simple: get that PIB out there and that definition of insanity should not afflict us; that we cannot continue doing things in the same way and expect good results. So, we decided that instead of doing one piece of jumbled legislation which has been done in the previous assemblies, we should break the PIB into four pieces of legislations: the Governance Bill, the Fiscal Bill, the Host Community Bill and the Administrative Bill.
What is the level of success in that respect?
So far, we have had some success with that approach to the PIB. The Governance Bill, as we all know, has been passed a few months ago by the Senate and will soon be passed by the House of Representatives. As soon as that is passed, it will go to the table of Mr President for assent. We expect that, because the executive arm of government was fully carried along in the process, we will not have any problems with the president to give his assent to the Governance Bill.
The other three parts of the Bill —Fiscal, Host community and Administrative — have all passed the second reading at the Senate. After the second reading, we are expected to go into public hearing and put the Bill out there for the public to make comments on it and then it will go for the third consideration. So, all the other three parts of the PIB are at the second reading stage and we expect that by all next year, all of them must have gone through the Senate.
The approach that we have adopted this time is to work jointly, at the early stages, with the House of Representatives and so, we expect that the few delays that we have in passing the PIB Governance Bill will be overcome in the passage of the remaining three Bills. So, we expect that we will have the legislation on the PIB ready for all Nigerians and the stakeholders in the oil and gas industry in the first quarter of next year.
We know that a lot of politics is being played around the passage of the PIB. Though you have given the assurance that the Bill will be ready by the first quarter of 2018, how are we sure that this is going to be?
Well, what I was saying is that at the pace we are going, we should be done in the Senate with all the different parts of the PIB by the first quarter of 2018. We also expect that there will be no delay, both in the House of Representatives and the presidency. This is because all stakeholders have been involved in bringing the Bill to where it will be. So, we expect the process to be fast and we expect it to be all-inclusive. Like I said earlier, the PIBG Bill has been passed by the Senate and it is now with the House or Representatives and our colleagues there have promised that it will be passed in the next few weeks. So, we expect it to be on the president’s table by early January.
What informed the decision by the Senate to deviate from what obtained in the past and now decided to work with House of Representatives in respect of the PIB?
We are working with the House of Representatives because of the inherent delays. As you know, the lower chamber of the National Assembly has to do its work. So, in order to avoid such a delay, members of the House of Representatives have resolved that we are going to work together on the other three parts of the Bill so that they will be at the same stage as the move through both Houses so that by the time it passes through the House of Representatives, it will also be passing through the Senate simultaneously to make for a speedy passage.
You seem to lay much emphasis on the PIBG while downplaying the Fiscal and the Host Community Bills which are considered to be the most important parts of the PIB to drive the oil industry. Why is this so?
Are you saying the PIBG Bill is not important? The fact of the matter is that, yes, the Host Community bill is important because human beings are involved, but if the industry is not properly governed, then you have no industry. So, the point is that to priortise one Bill over the other, I am not sure we should do it like that. Rather, we should talk about all the four parts of the PIB which are all important for you to have the proper and desired changes that we are looking for in the petroleum industry.
What we are saying is that, while the Governance Bill is important, we also know that the one that is the dearest to the people of the Niger Delta is the Host Community Bill. We also know that the Fiscal Bill is also very important to the oil producers. We also know that the Administrative Bill is very important to our country and, of course, the Governance Bill is the overarching structure of that industry. We are saying that, because we are working together on all these various parts of the PIB, we are expecting that by the first quarter of next year, all these Bills would have, at one stage or the other, been on the president’s table. So, we expect that from January 2018, President Muhammadu Buhari would start signing the PIB Bills.