Oil Communities to Participate in Award of Oil Blocks : New Federal Government Policy
The federal government has signed a new policy that seeks to permanently end hostilities in Niger Delta by availing oil communities the opportunity to participate in block allocations.
This is called the National Petroleum Policy (NPP). The key provision of the policy includes the participation of host communities in transparent and competitive license allocation, albeit through special purpose vehicle controlled, registered and operated by the host communities.
Under the terms of the policy, which was approved last week, the Federal Government will ensure timely and competitive access to petroleum assets, to ensure optimum exploration, development and commercialisation of Nigeria’s oil and gas endowment.
It will be recalled that the major factor fueling agitation and violence in the producing communities over the years had been official sidelining of host communities in the business of oil exploration, refining and marketing.
The policy is coming after prolonged years of violent confrontations by various groups, which saw Nigeria’s crude oil production drop to a mere 800,000 barrels per day (bpd) mid-last year from a previous peak of 2.5 million bpd.
With the new policy which analysts fear if the emerging Petroleum Industry Bills (PIBs) will not void, government will therefore be left with no alternative than to negotiate with stakeholders in the Niger Delta with a view to charting a mutually beneficial way forward now, on a purely sustainable business understanding.
Observers say though the policy objective for the midstream is to attract as much investment as possible into petroleum refining transportation and storage, and for the downstream, create additional value for Nigeria through refining of oil, and further processing into significant end products for industries such as complex petrochemicals and plastics, involvement of host communities will create the needed atmosphere for smooth business activities.