Nigeria’s Minister of State for Petroleum, Timipre Sylva, said on 11 February that a new Petroleum Industry Bill (PIB) would be presented to the National Assembly the following week and that the lower House of Representatives would finally debate and pass the PIB which had been approved by the Senate last year. So far, however, it has not arrived from the Executive.
The new version has been worked on with the full collaboration of the National Assembly. Sylva maintains that the bill which has been passed will be signed into law by President Buhari by May. He noted that the country has only been able to increase its reserves from 37 billion barrels to 37.5 billion barrels since 2007 because of the lack of a regulatory framework for the sector.
The NNPC’s Group Managing Director (GMD), Mele Kyari, backed the minister on the timeline for a new petroleum bill and insisted that a clear fiscal landscape will be in place by June. Executives of major IOCs are reported to have expressed their concerns and needs to the government but are unclear if the latter has taken them on board in the new bill. Kyari assured at the recent Nigeria Oil Summit, however, that the new bill will ensure that investors are able to recover their costs and make decent profits.
The bill is essential to reverse the country’s deteriorating oil production outlook. Wood McKenzie released a report on 14 February which stated that Nigeria’s oil output could fall by as much as 35% if major reforms are not implemented in the sector. It noted that deep-water offshore fields with capacity to generate as much as US$2 billion a year would not proceed without much clearer fiscal terms being in place.
Three major deep offshore fields — Bonga Southwest Aparo operated by Shell; Total’s Preowei; and ExxonMobil’s Owowo fields — are not considered ‘economically viable’ using the current fiscal terms and an oil price level of below US$60 a barrel. McKenzie expects that FID on the fields could be delayed for a minimum of two years even after the new PIB comes into effect. There are those who also think that Nigeria will struggle to revive investment even after the bill because of the oil majors’ declining interest in big oil and gas projects as well as the more recent discoveries in competing African countries which have much better fiscal terms.