By Clara Nwachukwu
The Shell Group has declared that the draft Petroleum Industry Bill, PIB, before the National Assembly, is not only lopsided, but will also frustrate current investments in Nigeria’s oil and gas industry and impede on the ability to meet set targets on power generation.
Shell’s declaration contradicts widely held belief that the PIB is tilted very much in favour of the international oil companies, IOCs, who, for decades have dictated the tone of the industry operations.
The Country Chair, Shell Companies in Nigeria, Mr. Mutiu Sunmonu, made the declaration at the Nigerian Extractive Industry Transparency Initiative, NEITI, PIB Stakeholders Forum, which ended in Lagos on Friday.
Sunmonu, breaking his silence on the bill for the first time, said: “As it stands right now, the PIB will render all deepwater projects and all dry gas projects— whether for domestic or export markets— non-viable. “The opportunities I have just outlined will be lost. And the opportunity to monetise some of the world’s best gas reserves will be lost. The opportunities to kick-start the power sector— the key to economic growth— using easily accessible gas will also be lost.”
In the area of gas for instance, he said the gas should be used to regenerate the power sector to provide reliable electricity for industrial growth.
“If the PIB does not encourage the development of the domestic gas market, none of this will happen and the consequences are almost unthinkable,” he added.
Speaking specifically on the fiscal provisions of the petroleum legislation, the Shell boss argued that “the PIB needs to address long term industry issues; for example, funding issues for Joint Ventures, JVs, where funding requirements have constrained production growth.”
Sunmonu, who spoke on Investors Perspective on the PIB, noted that as desirable as having a strong national oil company is, it has to be one that can compete favourably. He said: “Any national oil company has to partner positively and, again, has to compete with those elsewhere that are also seeking external investment. NNPC has got to be able to fund its share of JV costs if it is going to attract such external investment and partnership.”
He recalled that the industry for many years had suffered huge losses on account of militancy and restiveness in the Niger Delta, which operators have not recovered from and should be taken into consideration.
Seeks balanced legislation The Shell boss further maintained that in spite of the issues generated by the PIB, what is required by the industry players is a bill that will “create a level playing field— one that is fair to all investors— big, small, new or old.”
He said the bill should also provide “sufficient incentives for new investment to fuel growth,” adding that “it is important to take local business challenges in Nigeria into consideration as well as the impact on existing investments made in good faith at current legal and fiscal terms.”
Against this background, Sunmonu insisted, “what we have seen of the draft PIB to date does not indicate a bill that fits these criteria. And this is the opinion not only of the major players in Nigeria’s oil and gas industry, but, as I mentioned earlier, industry analysts as well.
“What we have seen and what we know of the current draft PIB requires significant improvement to secure Nigeria’s competitiveness, and attract the required level of investment to enable exploration to increase Nigeria’s reserves and then foster development of the projects to monetise them.”