Production Sharing Contract (PSC) Bill Scales Second Reading In Senate

The Production Sharing Contract (PSC) Act Bill on Tuesday scaled
second reading in Senate.

The Bill entitled: “Deep Offshore and Inland Basin Production
Sharing Contract 2004 (amendment) Bill 2019” was sponsored by
Senator Albert Bassey Akpan.

Senate President Ahmad Lawan referred the Bill to the Senate
Committees on Petroleum (Upstream), Gas and Finance for further
legislative work and to report back in one week.

Senator Akpan who represents Akwa-Ibom North East, in his lead
debate said that the Bill seeks to amend Section 5 of the PSC Act
to bring the provisions of that section into conformity with the
generality of the provisions of the Act and in congruence with the
intendment and essence of Production Sharing Contracts.

“The PSC arrangement was offered by the Federal Government of
Nigeria as a contractual arrangement for the exploration and
production of petroleum in the 1991 licensing round,” he said.

He explained that the fiscal incentives from the arrangement are
distinct and absent from the provisions of the Petroleum Act and
the Petroleum Profit Tax Act which regulates the fiscal regime of
other types of petroleum exploration and production
arrangements.

He said: “The Act provided in Section 16 that where the price of
crude oil exceeds US$20 per barrel, the PSC Act will be reviewed to
ensure that the share of the Federal Government of Nigeria (FGN) in
the additional revenue is adjusted to the extent that the PSCs
shall be economically beneficial to the FGN and that in any event,
the PSC Act shall be liable to be reviewed after 15 years from its
commencement in 1993 and every 5 years thereafter.

“This amendment alters the royalty payable by the PSC
contractors so that whenever oil and gas price increases the share
of government increases with the automatic inception of the newly
introduced royalty by price mechanism.”

Also on Tuesday, the Senate called on the Federal Government to
give priority attention to the development of the Oloibiri Oil and
Gas Research Centre and Museum.

This call followed the consideration of a motion titled: “The
need to ensure immediate commencement of the Oil and Gas Research
Centre and Museum, Oloibiri, Bayelsa State -Nigeria’s first oil
field”, sponsored by Senator Biobarakuma Degi-Eremienyo (Bayelsa
East).

Senator Degi-Eremienyo, in his lead debate, noted that in
exhibition of the importance of the first oil field and the need to
develop the foreign exchange earning tourism potentials of the
area, the idea to build a world class museum of oil and gas was
conceptualised, designed and foundation stone laid by President
Shehu Shagari in 1953.

He said although that the Federal Government removed the project
from the National Commission for Museums and Monuments as awarded
and domiciled it with the Petroleum Technology Development Fund in
2011, the project still remains moribund.

The Senate in its resolution, urged the Federal Government to
direct the PTDF and its contractors to mobilise to site to commence
the construction of the Oil and Gas research Centre and Museum.

It also directed relevant Senate Committees to carry out
intensive oversight on the implementation of the project.