There are high indications that International Oil Companies (IOCs) operating in Nigeria, may be forced to leave the onshore, as a result of the many court cases they have to deal with.
Minister of State for Petroleum Resources, Chief Timipre Sylva, made the stunning revelation at the 2021 National Oil and Gas workshop for Justices and Judges with the theme, ‘Petroleum Industry Act New Legal and Fiscal Regime in the Nigerian Oil and Gas Industry,’ in Abuja on Tuesday.
Sylva, who narrated how a conversation in his early days as minister revealed the extent to which litigations was impeding the growth of the nation’s oil and gas industry, said it was a challenge that must be death with head on.
He said: “We must start from the judiciary because I can tell you this is one of the weakest links in the oil and gas industry. When I first came in as Minister of State, someone told me he had over 200 cases in court. He wanted us to support him to win the cases.
“What I realised was that the industry was taking oil companies to court and unfortunately, it has impeded the growth of the industry.
“Today I can tell you that a lot of oil companies are contemplating leaving the onshore of Nigeria. One of the biggest problems we have onshore in Nigeria is incessant court cases that reverberate across the industry.”
The minister further noted that implementation of the PIA would provoke more court cases especially by “disputants” whose opinions differ on how the law should be operationalised.
To this end, he urged the Justices and Judges to acquaint themselves on areas likely to be the most contentious, to enable them apply the law to have the desired multiplier effect on the economy, investments, infrastructure, employment, the environment and well-being of the citizenry.
Sylva, who noted that the Nigerian petroleum industry was facing more critical challenges besides the COVID-19 pandemic, said the adoption of climate change policies by countries would affect fossil fuel financing and equally reduce government’s revenue.
“Several nations have announced the intent to comply with the Paris Agreement 2016 and have adopted climate change policies with a target of being carbon neutral by 2050 or 2060.
“This means that the usefulness of fossil fuels will diminish significantly, and even where they are still utilised, must be offset with some form of carbon capture technology. The EU, UK, South Korea, Japan, China, Brazil, and some other nations fall within this category.
“Global financing of fossil fuel projects has also been affected, with many donor nations and other major players within the financial ecosystem indicating their intention to stop funding projects fitting this description by 2025. This will inevitably impact on the ability of industry players to access needed funds with which to bring assets into production and by extension, reduce government revenue ordinarily derivable from this extractive industry.
“The volatility of global crude prices, the cuts in OPEC quota, the proliferation of countries finding hydrocarbons and making same available for exploitation via bid rounds, have all impacted on the demand for crude as well as the revenue and profits accruable therefrom.
“The above scenario provides the context within which your Lordships will preside over cases that are brought for adjudication in your respective courts. Our current realities necessitate that cases be treated with dispatch and urgency as the luxury of time is no longer available.”
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