Nigeria launched a robust defence of planned reforms to the oil and gas sector yesterday, dismissing industry claims that the legislation could deter billions of dollars of investment.
Oil firms including Royal Dutch Shell told an industry conference on Tuesday the plans could slow development of key deep water reserves and help Angola eclipse Nigeria as Africa’s biggest oil producer.
Under the current version of the proposed Petroleum Industry Bill (PIB), the government would be allowed to renegotiate old contracts, impose higher costs on oil companies and retake acreage that firms have yet to explore.
But Pedro Van Meurs, a consultant to the government on the planned reforms, fought back against industry concerns that the new framework would make Nigeria an exceptionally costly investment destination for deepwater projects.
“Someone said here that the government is ‘killing the goose that laid the golden egg.’ Nothing could be further from the truth,” he told the Nigeria Oil & Gas conference, attended by industry and government officials, in the capital Abuja.
“We heard a presentation from Shell on deepwater that said investment would disappear. Again, nothing could be further from the truth. In fact the terms to be proposed are internationally competitive,” Van Meurs said.
The legislation has been stalled by the dispute between government and the industry, which already complains of funding difficulties and has suffered years of unrest in the oil-producing Niger Delta region.
There is support for industry reforms from both President Umaru Yar’Adua, who returned to Nigeria yesterday after three months in a Saudi hospital, and Vice President Goodluck Jonathan, who is running state affairs.
The bill is still being shaped in parliament before it will be sent for the presidency’s approval and executives expect no impact as a result of Yar’Adua’s return.
“It makes no difference to us,” Alex Musa, Total’s deputy managing director for exploration and production in Nigeria, told Reuters. “Nigeria has its own institutions and traditions and we respect them.”
Some industry executives complain they have not been properly consulted on the planned reforms.
“Of course the government doesn’t give up everything but I think they have bent over backwards. During discussions here there have been misunderstandings of what has been in the government memorandum,” Van Meurs said.
Shell’s outgoing Executive Vice President for sub-Saharan Africa, Ann Pickard, told the conference on Tuesday that Angola’s offshore output would be more than double that of Nigeria by 2020 as it was more attractive for investment.
Van Meurs dismissed the claim. “Angola has a far tougher system than what we are proposing in the Delta,” he said.
The bill is still being worked on by both chambers of parliament and industry executives say there is still time to lobby for changes. The two versions will then need to be harmonised before being approved by the president.