International Oil Companies, IOCs operating in Nigeria have raised alarm over the drop in drilling activities in the country, which may affect crude oil reserves addition in the future.
The alarm is coming on the heels of fresh promise by Vice President Namadi Sambo, last week that the Petroleum Industry Bill, PIB, which has stifled fresh investments in the nation’s oil and gas industry will be passed in into law by the National Assembly by December.
Government has given similar assurances in the past, which came to nothing with regard to passing the bill, in view of all the contentious provisions, mainly fiscal, it contains.
The Country Chairman of ExxonMobil companies in Nigeria, Mr. Mark Ward, who raised the alarm on possible threats to reserves addition at the opening of the 3rd Deep Offshore West Africa Conference, DOWAC in Abuja, noted that while average oil discovery in the rest of West Africa has increased, that of Nigeria continued to decrease.
Ward, who spoke on: West Africa Deepwater: Successes, Challenges and Future Prospects in a keynote address to the conference, attributed the development to issues relating to high costs, which he put at over 50 percent increase, policy instability, lack of active deepwater exploration and a host of others.
He recalled that in the past deep water project lead times in Nigeria were between seven and 10 years, but has now increased to 14 years, due to, “Protracted permitting and approval process, increased investor uncertainty, potential changes to existing fiscals and lack of deep water gas development enablers, and additional local content requirements,”
Passage of PIB
Against this backdrop, the Vice President, promised that the PIB will be passed into law next month, adding that the new law would remove the opaqueness that had often characterised operations in the Nigerian petroleum industry.
Sambo, who was represented by Minister of Petroleum Resources, Mrs Diezani Alison_Madueke, at the DOWAC, organised by the Nigerian Association of Petroleum Explorationists, NAPE, said that the bill would create a comparative and competitive fiscal regime that would encourage investment in the sector.He said the law would not only give additional incentives to oil and gas investments, but cater for various stakeholders’ interest.
in his opinion, good times await those desirous of investing in Nigeria, as the incumbent government was committed to instituting reforms that will advance the growth of the industry.
Sambo said, “The bill will create a level playing field that indigenous investors can compete and reduce foreign dominance of the industry.”
he added that the presently, the Federal Government is poised and focused on deepwater assets and development, saying that despite the challenges in the sub_sector, Nigeria had done credibly well in ensuring that the deep water grew and developed actively in the last few years.
The vice president, who lauded the theme of the conference, said that the issues surrounding deep water development have been a major part of the challenges facing government and the industry, adding that both the Nigerian Content Act and the PIB, have made provisions to tackle these challenges.
He argued that with these policies, the lull being experienced in the industry will disappear and give way to increased investments and operations, following the amnesty programme granted to militants in the region.
He said, “The Act also guarantees the participation of multinational companies that operate within the requirements of the law. I must commend our National Assembly for consulting widely to ensure that the expectations of all stakeholders are considered and taken on board.
“The PIB will incentivize the development of small fields and create a new acreage management system and it will create a National Oil Company, NOC that will be commercially focused and capitalised,” he added.
Also speaking, the NAPE President, Mr. Issac Arowolo, in his welcome address, said that the West Africa sub region had been identified as one of the most prolific hydrocarbon hotspots in the world.
He maintained that several successes in the deep water exploration, development and production in West African had lent credence to the enormous potential in the sub_region.
Arowolo noted that West Africa, particularly the Gulf of Guinea, produced about five million barrels of oil per day and may hold as much as 10 percent of the world’s oil reserve.
According to him, “The rate of discovery of new oil reserve in Africa has been one of the fastest in the world in the recent years. Most of these new proven reserves have been found around the gulf of Guineas.”