Okon fires broadside

NNPC's group general manager for strategy, Tim Okon, has gone out on a limb with the issue of another interagency memorandum on the Petroleum Industry Bill (PIB) and letter attacking changes made by the Senate Upstream Committee, chaired by Senator Lee Maeba.

NNPC's Venezuela consultant, Pedro Van Muerrs, circulated the memorandum in July on behalf of Okon as leader of the government's Interagency Team. The new memorandum is described as the final submission of the Interagency Team.

It is unclear if Okon and Van Muerrs had any approval for making the new submission from either Minister of Petroleum Dezeani Allison-Madueke or the group managing director of NNPC, Austen Oniwon. Neither appears to have known about it until after the event.

The letter has drawn a fierce reaction from some senators who say that a second-tier NNPC official such as Okon has no right to interfere in the legislative process or make criticisms of the Senate's work.

Okon and Van Muerrs have objections to the way that the drafted Senate Bill departs from their own work but it was not expected they would become so vocal about them. An NNPC source says they took the initiative because they bemoan the failure of Allison-Madueke to press their case in the Senate.

Despite the latest salvo, it appears unlikely that the National Assembly will be rushed into adopting the latest Interagency draft of the PIB. Motions are expected soon in the Senate and House of Representatives for an adjournment of the new sessions because of the election.

The Senate was reconvening this week after the summer recess and the House of Representatives is due to return on 12th October. Although the Senate and House could be recalled to vote on the PIB, it cannot be done until the key committee stage is passed.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2010 Menas Associates

IOCs and Nigerian Interagency Group wide apart

The refusal of the federal government's Interagency Group
to back down on its plans to use the Petroleum Industry Bill to change the measurement point for crude production for tax purposes has become one of the biggest bones of contention with the international oil industry.

Up to now, Nigeria has made the measurement point the same as the point of transfer for crude, i.e., the terminal. However, Tim Okon, general manager for strategy at the Nigerian National Petroleum Corporation (NNPC) and a leading figure in the Interagency team, has been insisting that it be moved to the point of production, i.e., the field.

The proposed change has massive consequences for the IOCs, in particular in the onshore environment. In effect it means they would be obliged to pay tax and royalties on sometimes substantial volumes of stolen crude that is drawn off between the field and the terminal. A source with one IOC says, 'A loss of 10 per cent is entirely possible and that could make the difference between whether you break even or not in Nigeria.'

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2010 Menas Associates