The passage of PIB, which has faced a couple of setbacks for almost 2 decades, has been held up by political disagreement and objections from International oil companies who say that the government is asking for an excessive increase in revenue.
They said that the bill, which is before the National Assembly for consideration and passage, is unfavourable for deepwater projects, and urged the Federal Government to offer royalty relief programmes.
Managing Director/Chief Executive of Total Exploration and Production Nigeria Limited, Mike Sangster, disclosed this while speaking on behalf of the Oil Producers Trade Section (OPTS), a group of 30 oil producers that include Royal Dutch Shell, Exxon Mobil Corporation, Chevron Corporation and Eni during a public hearing at the National Assembly.
Sangster who also chairs the group said some of the provisions in the bill do not provide a favourable environment for future investments and for the launching of new projects.
He said that to encourage new investment, the proposed law should grant deepwater oil projects full royalty relief for the first 5 years, or a graduated royalty programme.
Making a presentation on gas, Sangster said, “The PIB should provide a clear path for transitioning to a free market-based pricing, not add additional compliance conditions on domestic gas delivery obligations as a precondition for export gas supply.”
On the preservation of terms of existing investment, Sangster said, “We recognize the government’s right to change laws but the PIB must explicitly preserve rights. Operators should be allowed to retain the entirety of their lease areas and new terms should apply to new contracts, licenses and leases.”
He noted that Nigeria was facing growing competition for new investments, as the country was able to attract only $3 billion or 4% out of the $70 billion that was spent on new projects in Africa between 2015 and 2019.
The oil firms desire a critical look into their concerns about the PIB as at least half of Nigeria’s total crude output is from offshore oilfields, helping to offset declining production from mature onshore assets.
The bill which seeks to introduce pertinent changes to the governance, administrative, the regulatory and fiscal framework of the Nigerian oil and gas industry, has been held up by political disagreement and objections from International oil companies who say that the government is asking for an excessive increase in revenue.