OPPOSITION to the proposed reform in the petroleum industry, from sector operators, may have heightened, as the oil multinationals have renewed their struggle to scuttle the Petroleum Industry Bill (PIB), which they assessed as a veritable to their operations in Nigeria.
Specifically, indications emerged that the International Oil Companies (IOCs) operating the country may have considered to halt further investment, in the nation's oil and gas sector.
The PIB, currently before the National Assembly, has in recent times, been a controversial discourse between the Federal Government and the oil multinationals, but recent intrigues revealed a fresh tangle that may possibly derail agenda of the Federal Government on the industry.
After the tough session, which nearly split the industry at the national oil conference in Abuja recently, the major oil firms again brought the issue to limelight at the on going Offshore West Africa (OWA) 2010 Conference in Accra, Ghana.
The oil companies seemed to have aligned their stake on the bill, as they confirmed that there would be no further investments in the Nigerian upstream sub-sector, until the government allows investors to know the terms and conditions for investing.
They claimed that uncertainties surrounding the bill has prompted them to adopt a "wait and see" option for further investments in the sector.
Among the speakers at the Accra event was the Managing Director of Shell Nigeria Exploration and Production Company (SNEPCo) Mr Chike Onyejekwe, who delivered a paper titled 'Nigeria's deep water journey and the challenges ahead'.
He said the bill must find a fair balance to allow the government extract value during good times and ensure continued investment during tougher times.
"The 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. 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 (PSC's)," he said.
Also, the Chairman/Managing Director ExxonMobil companies in Nigeria, Mr. Mark Ward, stated that the oil companies have aligned to form a formidable position on the proposed bill, adding that the deepwater province in Nigeria is very rich in hydrocarbon and requires lots of work to be done, but that may be very difficult to realise until the issues surrounding the new regulations are resolved.
His words: "Industry is aligned in terms of our perspective on the bill, we've have expressed some significant concerns about how the bill might ultimately be finalized. It's 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 towards the opportunity to provide inputs 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 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. 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."
He added: "With respect to the bill itself, it's obviously making its way through the legislative process as with any piece of legislation. There are things that you like and don't like, we're hoping that there's going to be an opportunity to provide more inputs, we do have concerns about how it may ultimately be finalised, we'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 it's the government's decision on what to do. But we're hopeful that they'll take our inputs 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 we'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."
Source:© Copyright Guardian
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