“Production will be down about 40 percent by 2020 without new investment,” Mutiu Sunmonu, Shell’s chairman for Nigeria, said in the copy of a conference presentation in the commercial capital of Lagos. The proposed “fiscal package is not conducive to investment. As a result, there will be few new investments.”
The Petroleum Industry Bill, approved by the Cabinet and sent to the Parliament in July, seeks to boost Nigeria’s share of profit from oil produced off its shores. The country wants a 73 percent share, up from 61 percent, Petroleum Minister Diezani Alison-Madueke said Sept. 28. Previous terms from 1993 are based on an oil price of $20 a barrel and are unrealistic, she said.
“All deepwater, most gas and some oil projects will not take place under PIB terms,” Sunmonu said in the presentation e-mailed by conference organizer, the Nigerian Gas Association.
Shell, Chevron Corp. (CVX), Exxon Mobil Corp. (XOM), Total SA (FP) and Eni SpA (ENI) pump more than 90 percent of Nigeria’s oil through ventures with state-owned Nigerian National Petroleum Corp. They said in a joint presentation to lawmakers in 2009 that proposed higher taxes in the legislation would make exploration uneconomical.
Under the bill, royalties, rentals and penalties would be set by the petroleum minister, while the country’s president would be able to award licenses without competitive bidding.
“Fundamental components of investor confidence are lacking in the bill,” Sunmonu said. There’s “no transparency on key terms due to uncertainty in provisions” including on royalties, fees and penalties.
Nigeria, Africa’s most populous country with more than 160 million people, relies on oil for 80 percent of state revenue. The West African nation produced an average 2.1 million barrels of crude a day in October, figures compiled by Bloomberg show.
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