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Weekly UpdatesAt a Senate hearing on the proposed Petroleum Industry Bill (PIB) to change the E&P regime and make operations more transparent, as well as restructure NNPC, Shell Managing Director Mutiu Sunmonu on July 28 said Shell Nigeria's JV then was producing at less than 30% of its capacity due to the delta unrest and funding problems. Shell Chairman/CEO Basil Omiyi, heading the Oil Producers Trade Section which represents foreign oil firms, said the industry needed more time to present economic analysis and lay out its case, adding: "The aggregate impact of multiple taxes, high royalties and loss of incentives under the Petroleum Industry Bill as currently proposed will have a significant negative impact".
ExxonMobil's Nigeria Managing Director Mark Ward said the PIB, in its form, would mean all new planned E&P projects would be uneconomical, adding that Exxon planned to invest $60bn in Nigeria over several years. Andrew Fawthrop of Chevron told the heading deep-water oilfields would fail under the proposed PIB, adding that the new terms would give the government a bigger share of a smaller pie. He said Chevron was investing $3bn/year in existing and new projects in Nigeria.
The PIB then was almost half-way through the legislative stages of approval but some of its provisions were sending jitters among the big oil operators. The PIB, which had gone through its second reading and debate in the Senate, was intended to overhaul the regulatory and operational systems of the industry, Nigeria's lifeline. It is to transform the existing JVs and turn NNPC into an internationally-profitable entity. It aims to improve tax collection, decoupling oil from gas taxes as well as develop a system responsive to fluctuations in oil prices so as to capture on any windfall profits. Senate committee leader Teslim Folarin said the PIB was designed to simplify the collection of oil income through shifting emphasis to easily collectible revenue as royalties and rents.
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