22nd February, 2011
The Nigerian government must move ahead on a long-delayed overhaul of its oil industry if it wants energy firms to unlock investment in major new projects, key industry figures said on Tuesday.
The AFP quoted a government official pledging that legislation would be passed within weeks and promising that the state’s stake on offshore projects would not be more than 65 percent.
Uncertainty over sweeping legislation years in the making has put a chill on investments in new projects in Nigeria, one of the world’s largest oil producers, with energy firms unclear on what the new rules will be.
The overhaul is aimed at allowing Nigeria’s government to collect more revenue from lucrative offshore projects as well as restructuring the NNPC state oil company, widely viewed as corruption-ridden.
Shell’s executive vice president for sub-Saharan Africa, speaking at an industry conference in the Nigerian capital Abuja, said firms need to know where they stand so the country’s oil and gas potential can be exploited.
“I believe that we are much closer to achieving that, but little progress can be made until the bill has been passed and the industry has the clarity that it needs,” Ian Craig said.
Nigeria’s government argues that terms initially set for offshore projects were overly beneficial for international oil firms because they were aimed at encouraging investment in what was then a new area of development for the country.
Now it is time for Nigerians to benefit more from such projects, the government says.
But the proposed legislation also goes much further, taking in the state oil company, gas production and a range of other issues, and has gone through many different versions.
President Goodluck Jonathan has pledged that the bill will be passed before his current term finishes at the end of May, but it was the latest in a list of promised deadlines, with all the others having come and gone without action.
His special adviser on petroleum issues, Emmanuel Egbogah, firmly committed to that deadline again at the conference Tuesday, prompting applause.
“I can assure you that this will be the end of the story, that it definitely will be passed within weeks,” he said.
Wale Tinubu, the head of Oando energy firm, a Nigerian company that has become a significant industry player, also spoke of “major investment decisions” being delayed.
“Political will to get it done is critical,” he said, adding that now was the time to act with oil prices back up at around 100 dollars per barrel.
A speech delivered on behalf of Petroleum Minister Diezani Alison-Madueke, by an executive from the state oil firm, Nigerian National Petroleum Corporation (NNPC) acknowledged the impact the delay has had on investment.
But the speech also pledged that the legislation would be approved soon and would set out a fair framework for the industry.