Dr. Mikanti Baru, the Group Managing Director of Nigerian National Petroleum Corporation, NNPC has proposed a radical change in the regime of granting of oil prospecting licenses in Nigeria.
Speaking during a public hearing on the Petroleum Host and Impacted Communities Bill (PHICB), the petroleum Industry Administration Bill (PIAB) and the Petroleum Industry Fiscal Bill (PIFB), organized by the House of representatives, Baru, proposed five-year licenses for companies interested in prospecting for oil onshore and in shallow fields.
Baru also recommended licenses with duration of 10 years for companies seeking oil in the deep offshore and in frontier basins.
For production operations, he recommended a 20-year term across onshore, shallow, offshore and frontier basins.
Baru also proposed a split which will result in companies applying for a different license for prospecting and another for production.
Under PIAB, the NNPC GMD advocated for a Production Exploration License (PEL), for prospecting and a Petroleum Lease (PL), for producing.
In the PIFB version of the proposed oil industry law, Baru recommended a three-stage licensing regime consisting of Exploration License (EL) – to explore for petroleum on a non-exclusive basis; PEL – to prospect for petroleum on exclusive basis; and Petroleum Lease (PL) – to search for, win, work, carry away and dispose of petroleum.
Baru also demanded that all regulatory issues in the draft law should be placed under the regulatory commission to ensure effective governance of the industry.
He said the fiscal system should be simplified to enable progressivity and make implementation easier.
The GMD finally requested for clauses that will make the bills dynamic and reflective of economic situations.