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Published On: Fri, Nov 29th, 2019

Reps urges FG to review gas development agreements, cost recovery in production sharing contract

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By Christiana Ekpa

The House of Representatives has urged the Federal Government to review the contract terms in the Production Sharing Contract (PSC) with a view to accommodating gas terms such as Gas Development Agreements, Cost recovery, Profit Sharing, among others.
It mandated the Committees on Gas to liaise with all the contracting parties to the PSC, the Department of Petroleum Resources (DPR), Nigerian National Petroleum Corporation (NNPC) and all other relevant stakeholders to determine the current situation in the gas sector and create ways to attract investments and set out terms that will grow the economy with special reference to a legal backing to the pricing mechanism.
The House further mandated the Committee on Gas to effect amendment of the PSC Act with a view to accommodating Gas terms accordingly.
This resolution was reached on Thursday during plenary after the adoption of a motion on: ‘Inclusion of Gas in Production Sharing Contracts (PSCs) sponsored by Kolawole Lawal.
Lawal while presenting the motion said the House noted that the Production Sharing Contracts (PSCs) for offshore blocks were designed for oil and as a result, the terms for gas in it are either vague or non-existent and were never addressed by the Nigerian Gas Master Plan (NGMP).
According to him, the House was cognizant that Gas is set to take over the Petroleum industry because of the quest for alternative energy sources, hence the neglect of income from gas only spells doom for the economy as there is no check on the fraudulent activities of operators.
Lawal noted added that the House also: “notes that the first gas supply from Bonga field, known as OML 118, was carried out by Shell Production Distribution Company (SPDC) and was delivered via Offshore Gas Gathering System (OGGS), owned by Shell Nigeria Exploration and Production Company Limited (SNEPCO), to train 3 of Nigerian Liquefied Natural Gas (NLNG).
“Further notes that SNEPCO and SPDC operate as separate organizations with separate Managements, thus, while SNEPCO runs the PSC operations, SPDC runs the Joint Venture operations Shell in Nigeria.
“Worried about reports on OML 118 where the revenues for gas resources are not remitted as a result of the clear lack of gas clauses in the PSC governing Oil Prospecting Licence (OPL);

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