By Omoh Gabriel
LAGOSâ€”CRUDE oil prices, yesterday, fell below $79 from its $80 benchmark, two days ago. Crude for April delivery fell more than $1 per barrel, breaking a five-day rally, after the expectations of a build-up in U.S. crude oil stocks.
The drop in oil prices is coming on the heels of warnings by oil majors operating in Nigeria to the Federal Government that the proposed oil industry reforms could drive away billions in investment, slow development of deep water reserves, and help Angola eclipse it as Africaâ€™s biggest oil producer.
The warning was made at the ongoing oil and gas forum dubbed the Nigerian Oil Summit in Abuja.
A drop in oil investment and prices will jeopardise Nigeriaâ€™s drive to become one of the top twenty economies in the world by 2020. Equally, a drop in production volume is bound to constrain available revenue into the federation account for distribution while rising volume of production and prices will boost revenue accruing to the federation account for distribution to the three tiers of governments in the country.
Provisions in the proposed Petroleum Industry Bill, PIB, now in the National Assembly waiting to be passed into law is expected to empower the government to renegotiate old contracts, impose higher costs on oil companies and retake acreage that firms have yet to explore. The legislation has been stalled by the dispute between government and the international oil firms, which already complain of funding difficulties and have suffered years of unrest in the oil-producing Niger Delta region.
Speaking at the conference Royal Dutch Shellâ€™s Executive Vice President for sub-Saharan Africa, Ann Pickard, said: â€œThe PIB threatens to make a bad situation worse. If passed in the form currently proposed, its mistakes will take years to correct.â€ Pickard noted that the bill could drive as much as $50 billion in investment in deepwater projects elsewhere.
International firms argue that if the proposed bill was passed in it its current form, it would make it difficult to develop new reserves as well as to maintain current operations.
Managing Director of Chevron Nigeria Limited, Andrew Fawthrop said at the conference: â€œCurrent legislation being discussed will drastically slow down deepwater growth. Dialogue is needed to ensure that the governmentâ€™s well-thought out aspirations are achieved by the Petroleum Industry Bill and not inadvertently derailed.â€
Minister of State for Petroleum, Odein Ajumogobia, said the proposed legislation had been drafted in full consultation with industry and that 56 changes had been made to the bill in response to comments from foreign oil firms alone.
Meanwhile, Shell said, yesterday, that its oil output from onshore operations in the country rose to 500,000 barrels per day on average in the last quarter of 2009 but some 600,000 bpd remained shut in.
Shellâ€™s Executive Vice President for sub-Saharan Africa, Ann Pickard said:â€Weâ€™ve been ramping up production quite a bit. In the fourth quarter of 2009 we averaged over 500,000 barrels per day from SPDC. We still have around 600,000 bpd shut in.â€