Media professionals covering the oil and gas sector, as well as
the environment, have recommended the payment of royalty to government for
offshore crude oil drilling over 1000 nautical miles.
The journalists, who are participants undergoing the Master's
Class for Oil and Gas Reporting at the Pan Atlantic University, Ajah, Lagos
made the recommendation while studying the Petroleum Industry Bill,
expected to be deliberated upon any moment from now by the National Assembly.
For long International Oil companies , IOCs, have been exploiting
Nigeria’s crude oil for free at offshore drilling over 1,000 nautical
miles water depth.
The no royalty payment on far offshore drilling, an agreement
reached between the Nigerian government and the IOCs for many years , was based
on argument that environmental pollution
on Nigeria’s landscape was not too serious at such far offshore drilling.
But the journalists said , it was not proper for the IOCs to
exploit crude for free arguing that however far offshore, the environment was
not totally protected, explaining why the Niger Delta remains one of the most
polluted regions on earth.
“The journalists' position on the issue was based on the fact that
most of the country's crude production and reserve are in Offshore and not
collecting royalty at such offshore depth would amount to denying the country
of benefits from oil”, the presenter said.
He continued, “ "It is unfair to have no zero royalty where
we have the bulk of the oil". Most of Nigeria’s crude are offshore. The
journalists also recommended that the sharing of exploited crude oil between
government and IOCs should be mid-way between the drilling head and the
external terminal”.
“However, they believed that the Nigerian government should put
security in place to protect the oil pipelines from vandalism which has been
the head ache of IOCs”.
The PIB is said to be
debated again in no distant time at the National Assembly, because the
government wants to sign the PIB this year to enable the implementation of the
new oil reform.
Meanwhile, the
Federal government has been advised to factor in the impact of climate change
on water depth in determining the percentage of royalty accrued from crude oil
drilling, which is calculated based on depth of drilling.
An oil revenue consultant Oyinda Adedokun who gave the
advice in a lecture entitled, “ Revenue flow, allocation and management of oil
and gas” said, climate change causes the water level to increase or
decrease at some points of the year, thus making it difficult to determine the
exact depth of water.
Adedokun
said, to play safe, the water level should be measured regularly and the
average taken for the calculation.
The royalty on
oil is based on the depth of water with oil companies exploiting crude for free
at depths over 1000 nautical miles.
According to
the Fiscal Arrangements on Royalty on and production amendment
regulation, 1969, Petroleum drilling in Nigeria, shows that at 100 miles water
depth , the IOC’s pay 18.5%; between 101 -200 meters they pay16.5%;
201-500meter they pay 12%; 501-800meter they pay 8%, 801-1000 they pay 4% and
over 1000meters they pay 0 percent.
Earlier in a lecture, an oil revenue consultant, Mr. John Adidi
said it was condemnable to allow any company to tap non-renewable mineral resources
for free when in other climes, proceeds from such are invested for the future
generation and to prepare for the difficult days when the resources must have
finished.
“ It is a sin to Nigeria for International Oil companies to
exploit crude oil for free. That is why we are calling on the National Assembly
to speedily pass the Petroleum Industry Bill, PIB, which will correct most of
those injustices against the country by International oil companies. If the
Petroleum Industry Bill is signed into Law, never again will International Oil
Companies exploit Nigeria’s crude oil for free in the name of zero royalty on
offshore drilling over 1000 meters water depth”.
“As
part of the provisions,
the PIB seeks to establish what we call the Petroleum
Host Community Fund at 10% of the net profit which will help to develop the
communities where oil is produced and calm the unrest there. The PIB also
imposes a tax called the Nigerian Hydrocarbon Tax and many more, all
aimed at helping the country derive maximum benefit from its oil”
The PIB was submitted to the National Assembly on 18 July
2012, and is expected to be deliberated upon and enacted into law in the near
future.
Upon commencement, the PIB will repeal most laws which currently
govern the Nigerian Oil and Gas Industry, including the inclusion of bitumen in
the definition of petroleum.
By
Innocent Onoh
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