Nigerian National Assembly Wants Power to Approve All Oil Deals, Past And Present

A bill that would bring far-reaching change to the relationship between Niger Delta communities and the multinational oil companies that exploit their resources is under consideration by the Nigerian National Assembly after a measure sponsored by its chairman was favorably reported out the Senate Petroleum Committee.

Such legislation has a history of going nowhere, but that could change at any time as Nigeria faces increasing pressure from ethnic militants in the Niger Delta to improve their health facilities, power generation and telephone services in their communities with some of the wealth locally-drilled oil brings to the whole country.

It is not clear whether some blocks in Nigeria's Exclusive Economic Zone that have already been awarded would be affected by the bill, or whether it would win the support of Nigerian President Olusegun Obasanjo. It is unlikely that any blocks of the Nigeria-Sao Tome and Principer Joint Development Zone would be affected, as they are in waters claimed by both countries under the Joint Development Zone Treaty ratified in Feb. 2002.

It is also not clear whether firms that are controlled by Nigerians, such as ERHC Energy, which is controlled by Sir Emeka Offor and his clan - who together own 500 million shares or more of ERHC, an African source informs us - would be impacted by the bill.

Undoubtedly some oil companies would see the law if passed as yet another obstacle to doing business in a country that is feeling the pressure for change from its poorer regions.

Nonetheless, the tradeoff could be a restive but enduring peace with militants that may prevent huge losses such as Shell and Chevron have suffered in recent years from armed assaults on their pipelines and other facilities.

Here is the article from the Guardian of Nigeria this morning:

National Assembly plans law to ratify oil contracts
From Alifa Daniel, Abuja
A LAW to put an effective end to the frosty relationship between oil companies and their host communities is currently being considered by the National Assembly.

It will subject all agreements between oil companies and the Federal Government to the ratification of the National Assembly.

The bill is premised on the belief that the legislature, as the body that comprises the representatives of every community, is better positioned to protect the citizens' interest.

In effect, the companies will not set foot on the oil producing areas until a legislative approval is secured.

Also, agreements between the Nigerian National Petroleum Corporation (NNPC) and its Joint Venture (JV) partners will have to be ratified by the National Assembly.

The bill, which has already passed the mandatory First Reading in the Senate, is being sponsored by a group of lawmakers from the Niger Delta, led by the Chairman of the Senate Committee on Petroleum (Upstream Sector), Ledogo Lee Maeba.

It states: "The National Assembly shall review and assess all subsisting and subsequent agreements in respect of all operations or transactions carried out in or connected with the extraction and drilling of petroleum in Nigeria and ratify each agreement if satisfied that the terms of such agreement is not prejudicial to the interest of the Federal Republic of Nigeria."

Any agreement that is not ratified by the National Assembly, according to another section of the bill, shall have no binding effect or impose any obligation or liability on the Federal Republic of Nigeria.

Titled: "Petroleum Extraction and Drilling Agreements Ratification Act 2006," the proposed law is tailored after similar laws in other oil producing countries where their lawmakers are expected to ratify oil agreements before they come into effect.

But oil industry operators indicated last week that the lobby process for the bill had just begun. They wondered how feasible the law would be, "especially the aspect that calls for the ratification of previously signed agreements."

The bill reads further: "Notwithstanding anything to the contrary contained in the Petroleum Act or the Nigeria National Petroleum Corporation Act or in any other enactment or law, the provisions of this Act shall apply to all matters pertaining to the power to enter into agreement on behalf the Federal Government of Nigeria in respect of all operations or transactions carried out or connected with the extraction and drilling of petroleum in Nigeria."

It continued: "All agreements contained in any contract or instrument or at law or in equity which creates or affects the rights, interests, obligations and liabilities of the Federal Government of Nigeria in respect of any operations or transactions carried out in or connected with the extraction and drilling of petroleum in Nigeria shall be submitted by the corporation (NNPC) or other competent authority of the Federal Government of Nigeria making such agreements to the National Assembly within two weeks of the making of such agreements."

The National Assembly, according to the bill, is required to ratify each agreement submitted to it within 30 days of the submission of the pact by either the NNPC or any agency of the Federal Government making such agreements.

The legislative body, however, has the power to extend the period for ratification by a resolution of both houses of the National Assembly. But where it does not extend the period, the agreement "shall be deemed to be ratified as if it was duly reviewed and ratified by the National Assembly."

The government agency making the agreement is required to submit to the National Assembly all documents and information required for the review and ratification.

The bill declares as subject to ratification, "any agreements contained in any contract or instrument or at law or in equity which creates or affects the rights, interests, obligations and liabilities of the Federal Government of Nigeria in respect of any operations or transactions carried out in or connected with the extraction and drilling of petroleum in Nigeria."