Nigeria may lose up to 38 percent of its deepwater oil production under the terms of the proposed new Petroleum Industry Bill.
Nigeria may lose up to 38 percent of its deepwater oil production under the terms of the proposed new Petroleum Industry Bill, Nigerian daily Punch reports, adding that this could happen by 2025. Further, the industry could lose almost a third of its deepwater production potential by 2030 because of the bill.
The long-awaited piece of legislation, which has been in the works since 2008, should replace a collection of more than a dozen separate laws and regulations. The country’s parliament plans to pass the new law in the first quarter of 2021.
However, according to the industry, the bill in its current form will hurt rather than help Nigeria’s oil production.
“The current PIB 2020 does not improve the investment environment for new project FIDs (final investment decisions) to be taken,” the country’s Oil Producers’ Trade Section said in a document cited by Punch.
“With the right fiscal framework, OPTS could invest an additional about $9bn in deepwater projects to grow oil and gas development in Nigeria with resultant benefits for the nation,” the group, which comprises local and foreign oil and gas companies, also said in the document.
The current PIB, however, did not contain this framework, leaving space open for problems including “Uncompetitive fiscal terms, increasing cost, unsettled deepwater disputes, and upcoming deepwater lease expiry.” These would increase risks for investors, the group said, and prevent new investments, according to the Punch report.
Nigeria is Africa’s largest oil producer, but its oil wealth has been a curse. Rife corruption and environmental damage have plagued Nigeria’s oil history for decades. The Petroleum Industry Bill was meant to solve most of the industry’s problems and bring in more oil money by amending the royalty regime and production sharing agreement templates. Based on the industry’s complaints, it seems the bill is set to benefit the state but at the expense of the industry, which may not be the most sustainable and mutually beneficial decision.