Oil firms in talks with Nigeria over coming law

Legislation currently before parliament would lead to sweeping changes in the petroleum industry, including an increase in taxes and royalties paid by oil majors operating in Nigeria, the continent’s most populous nation.

Companies such as ExxonMobil and Shell have criticised the proposed fiscal terms as too harsh and say they will force out new investment.

Oil Minister Diezani Alison-Madueke has argued that the terms are fair, but told an economic forum on Tuesday that the government was engaged in talks with the industry to address concerns.

“We are in ongoing discussions with our multi-national partners as there have been ongoing concerns about our fiscal terms,” she said.

“We feel that they are fair, but we are in ongoing discussions and we will continue those discussions with our partners, weighing both sides of the scales as we go forward. The intent is to ensure that we are all in what is considered a fairly win-win situation at the end of the day.”

The oil industry overhaul has been delayed for years, but President Goodluck Jonathan sent a new version of the legislation to parliament in July and lawmakers are expected to hold public hearings on it in the coming weeks.

Oil companies have argued that terms proposed in the bill would not prevent new investments in the industry, which is currently producing between 2.0 and 2.5 million barrels per day.

Mark Ward, head of ExxonMobil’s Nigeria unit as well as chairman of an association of oil majors operating in the country, has said that Nigerian oil production will fall by 40 percent by 2020 without new investments.

However, he said the industry could grow by 50 percent over the same period if planned investments go forward.

“You’ve got to have a balance between the fiscal package to be able to incentivise investment,” he said at Tuesday’s forum.

Oil majors are also concerned about other issues linked to the overhaul, including whether the terms of already existing contracts will change.

Nigerians have long pushed for a fairer shake from an industry that has left the country’s Niger Delta region badly polluted.

However, activists say the current legislation falls far short of bringing meaningful transparency to the industry, widely seen as rife with corruption in one of the world’s most graft-ridden nations.