Nigeria looks set to unbundle a long-awaited oil law to speed up its passage through parliament, potentially unlocking billions of dollars in frozen investments.
The Petroleum Industry Bill (PIB) has been gathering dust since 2008 because of disagreements between the government and global oil majors over its terms.
The new head of the Nigerian National Petroleum Corporation (NNPC) Emmanuel Kachikwu, who is likely to become junior oil minister, said recently the delay was hurting the economy.
“The average source of volumes in investments that we are losing on an annual basis because of the lack of PIB is in excess of $15 billion (13.7 billion euros),” he told senators.
“The non-passage of the bill in whatever form over the years has created a level of uncertainty that no international investor wants to grapple with.”
Parliament needs to “find a way of working with us and go ahead and pass those elements of (the) PIB where there’s not much contention”, he added.
Analysts believe the PIB would help redefine the fiscal terms in the oil and gas industry, increase Nigeria’s share of revenue and also help restructure the state-run NNPC.
Kachikwu, a former ExxonMobil executive, was appointed in August as part of President Muhammadu Buhari’s drive to overhaul the NNPC and cut down on corruption.
The PIB as proposed would see international oil companies pay 10 percent of their net profits to a “Petroleum Host Community Fund” to benefit oil- and gas-producing areas.
Oil majors, though, have balked at the prospect of their profits being cut, complaining the terms were too harsh and could stymie investment.
Companies such as Shell, Total and Chevron have in recent years been selling off assets in Nigeria while new investments have stalled.
At the same time, areas that would benefit from the increased revenue are mainly in the oil-producing south, creating opposition in other parts of Nigeria.
Politicians in the impoverished Muslim-majority north already claim the largely Christian south already gets more than its fair share of oil revenue.
Both complaints have contributed to the delay.
White collar unions have also said the terms in areas such as the extent of Nigerian firms’ involvement in the sector needs to be addressed.
NNPC spokesman Ohi Alegbe said the PIB was currently being fine-tuned before it is resubmitted to parliament early next year.
“The vice president (Yemi Osinbajo) and Dr Kachikwu have made a commitment the PIB will be split into sections. This is necessary … to move forward,” he said.
Muda Yusuf, director-general of Lagos Chamber of Commerce and Industry (LCCI), said cherry-picking parts of the wide-ranging bill made sense in the current economic climate.
Nigeria — Africa’s number one crude producer and biggest economy — depends on oil for more than 90 percent of government revenues.
But the global crash in crude prices since mid-2014 has seen revenues fall by 70 percent in that time, weakening the naira currency and depleting foreign reserves.
“Our current economic problems have roots in the global oil crash. If the PIB is in place, the oil majors will be encouraged to invest more in the industry,” said Yusuf.
The latest proposals have created uncertainty among many expatriate oil workers at a time of wider disquiet about the Nigerian economy among investors.
But a senior executive of the Oil Producers Trade Section (OPTC) of the LCCI, who asked not to be identified, said oil firms would be happy if the grey areas were addressed.
“The PIB in its current form should be reviewed and broken down in such a way that the grey areas are resolved.
“The delay in passing this important law is hurting our business, hurting the economy,” he said.