TotalEnergies, Shell, Others Emphasis Sanctity Of Contracts As A Condition Needed To Attract Investments


Major operators in the oil and gas have said that for the type of investment envisaged in the Petroleum Industry Act (PIA) to be achieved the regulatory authorities and government must ensure that there is the sanctity of contract.

The chief executives of major oil companies who spoke at a panel session at the Nigeria  Oil and Gas conference, in Abuja, on Wednesday, said that though the PIA  is not a perfect document but has however given them some level of certainty concerning their operations. They all agreed that it has pointed the direction in which many issues worrying the industry are to be addressed.

Speaking during the panel session, managing director and chief executive officer of TotalEnergies Exploration and Production, Mike Sangster applauded the Act, especially, the establishment of the Host Community Fund, which he said is in the right direction, stating further that the PIA  will provide stable bases for investment.

He stated that though it is not perfect, it would, however, allow for stability in the operations of the industry.

“The PIA is absolutely necessary but it is not everything,” he said.

He advised however that addressing the security issue in their areas of operations is very important for investment, stating that the industry and the regulatory authorities need to put heads together to find a lasting solution to crude oil theft as it has constituted a huge loss to the country.

“Having incentives in the PIA is a good thing, but how it is going to be implemented effectively is one thing the authorities have to look at,” he said.

The Total Energies boss said there is a need for the Nigeria Upstream Regulatory Commission (NUPRC) to ensure trust and confidence-building between it and the operators because that is one of the ways the PIA can be institutionalized.“ if there is trust Nigeria will attract investment.

On penalties for gas flare, he said the drive to reduce gas flare is prompted by economic reasons. He stated it was not driving by the penalty imposed, but by the fact, that the company wants to drive down carbon emissions.

In his own comment, the country chair for Shell Companies and managing director of Shell Petroleum Development Company, Osagie  Okunbor, stated the  Act is a welcome development because it established clarity in respect of major investment decisions

He said:  “It is not perfect, no; we need other regulations to make the PIA fit for its purpose, but it is a stable base for investment.”

According to him, once the Act is able to ensure stability in the fiscal regime, security, sanctity of contracts and there is political stability, then investors would come.

With the Act, he said, if the operators run into troubles they know where to run to.

He advised stakeholders to stick to what they say as they all have the responsibility to change bad narratives about Nigeria.

The Shell boss said that one issue he sees with the PIA is that it needs to put in place a good fiscal regime for gas utilsation, adding that the country has an abundance of gas resources.

The chairman of the Oil Producing Trade Sector of the Lagos Chamber of Commerce and Industries (LCCI) and chairman of Chevron Nigeria Limited,  Rick Kennedy has advised those that have just been awarded marginal oil field licenses on what they need to succeed in their endeavour.

According to him, the winners must be hardworking, comply with regulations that govern the industry, and do their work with decorum.

On the issue of institutionalizing the PIA, he said: “This applies to everyone, it is a deep and not a small document. Everybody should understand his roles, as these are key to achieving this objective

Olusola Bello


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