The Nigerian Extractive Industry Transparency Initiative, which audits the country’s oil industry, Sunday urged parliament not to pass a revised version of a key oil sector reform bill, warning that the West African country risks losing $3 billion/year in oil revenue over the next five years if enacted.
NEITI said in a statement that the revised version calls for the government’s share of oil revenue from deepwater projects to be reduced to a minimum of 45%, from 56% currently, and that for joint venture projects to be reduced to 60% from 82% — which it said would damage the already fragile oil-dependent economy.
Nigeria is Africa’s biggest oil producer, with oil accounting for more than 90% of Nigeria’s export revenues and 80% of the government’s income. The Petroleum Industry Bill, which seeks to comprehensively overhaul Nigeria’s oil and gas industry, has been with parliament since 2008.
The bill seeks to rewrite Nigeria’s decades-old relationship with its foreign oil partners including Shell, ExxonMobil and Chevron. It also seeks to transform state-owned oil company Nigerian National Petroleum Corp., long hampered by funding problems, into five new profit-oriented entities.
Nigeria also hopes the PIB will tackle issues including funding shortfalls at its joint ventures with foreign firms, insecurity in the Niger Delta, increasing local involvement in the industry and production of more gas for domestic power.
But the bill has suffered several setbacks following repeated amendments due to strong protests from Nigeria’s foreign oil partners on grounds that its original provisions would hurt their investments.
But while foreign oil firms originally warned that the fiscal terms in the bill would stifle development of deepwater reserves and reduce the country’s oil production capacity, they now favor passage of the bill in some form because the delay has led to investors’ inability to plough in investments.
NEITI said Sunday that if the National Assembly passes the bill in its current form, the Nigerian oil and gas sector would be in serious danger of not achieving the desired national goals of promoting greater indigenous participation and increased revenue generational for national development.
Nigerian Oil Minister Diezani Alison-Madueke said earlier this month that she hoped to see the long-delayed bill passed into law before the end of 2011, the state news agency NAN reported on August 1.