By Yemie Adeoye
THE controversial Petroleum industry bill (PIB) currently being considered by the National Assembly has once again generated criticisms by the International oil companies (IOCâ€™s) operating in the country with some stating that uncertainties around the bill has frozen further investments in the Nigerian oil and gas sector.
Specifically, the oil companies seems to have come together to take a an aligned position on the bill as they confirmed that there would be no further investment in the Nigerian upstream sub_sector until the government allows investors to know the terms and conditions for investing.
This position was emphasized by the Managing Director of Shell Nigeria Exploration and Production Company (SNEPCo) Mr Chike Onyejekwe while delivering a paper titled â€˜Nigeriaâ€™s deep water Journey and the challenges aheadâ€™ at the just concluded Offshore West Africa (OWA) 2010 conference in Accra Ghana.
According to him the bill must find a fair balance to allow the government extracts value during good times and ensure continued investment during tougher times. â€œThe PIB proposes multiple increased royalties and fiscal terms that will slow down new investments in deep water considerably.
It will also exclude a number of legitimate costs from being recovered.Â Uncertainty around these issues are already stalling development of major discovered resources and discouraging companies from undertaking the aggressive exploration programs they launched under the 1993 provisional Sharing Contracts (PSCâ€™s)â€.
Corroborating this fact, the Chairman/Managing Director ExxonMobil companies in Nigeria, Mr. Mark Ward stated that the oil companies have aligned their selves to form a formidable position on the PIB, and according to him the deepwater province in Nigeria is very rich in hydrocarbon and requires lots of works to be done, but that may be very difficult to realize until the issues surrounding the PIB are resolved.
â€œIndustry is aligned in terms of our perspective on the bill, weâ€™ve have some significant concerns about how the bill might ultimately be finalized, its still very much in process, we as industry support the basic principles and objective as my fellow speaker from Shell pointed out in his speech, we are still looking to provide impute to make sure that our voice is heard and is considered in the ultimate development of the bill.
Deepwater is still very immature exploration province and there are lots of work that could be done but I think until the issues associated with the PIB are resolved and its firmly in place and the industry understands exactly what the conditions are going to be for future investments it could be difficult to project such.Â But offshore Nigeria has a lot of hydrocarbon potentials and we hope that there would be a good balance between what the government wants to achieve and providing a reasonable return for our shareholders.
We pride ourselves in what weâ€™ve been able to do in terms of financial content development; you may be aware that last year we won PETANSâ€™s national content company of the year award, weâ€™re very proud of that as it speaks volume of what we stand for and what we do.
With respect to the bill itself its obviously making its way through the legislative process as with any piece of legislation there are things that you like and donâ€™t like, weâ€™re hoping that thereâ€™s going to be an opportunity to provide more inputs, we do have concerns about how it may ultimately be finalized, weâ€™ve expressed those concerns through various industry organizations, OPTS in particular working with fellow companies in the industry to make sure that our impute is received.
At the end of the day, obviously itâ€™s the governmentâ€™s decision on what to do. But weâ€™re hopeful that theyâ€™ll take our Impute into account and find ways to modify the bill to make it acceptable to all stakeholders. Right now the banking industry is going through an evolution in terms of availability to financing, but weâ€™re hopeful that if there are future opportunities we can tap into the local capital market again in conjunction with the international financing that we build. I can also tell you that if capacity is there ExxonMobil would find a way to utilize it.â€ He enthused.