Aug. 1 (Bloomberg) -- Nigeria’s revised oil industry bill will help increase the country’s crude output by attracting foreign investors, Petroleum Minister Diezani Alison-Madueke said today.
The Petroleum Industry Bill, which was approved by the Cabinet on July 11 and presented to the Parliament a week later, proposes a 50 percent tax for onshore and shallow fields and 25 percent for deep-water fields, according to a copy of the bill obtained by Bloomberg.
The bill is designed to create “a fair balance between small and big operators operating in the same terrain” and will give “operators the opportunity to make fair returns during field decline,” Alison-Madueke said today in an e-mailed statement from Abuja, the capital.
Operators will pay based on production, “as opposed to terrain and investment as was previously done,” Alison-Madueke said. The bill proposes lower rates on condensate from large fields as well as ultra-deep water fields, she said.
The bill, which seeks to reform the way the oil industry of Africa’s top producer is regulated and funded, was first introduced to parliament more than three years ago. Lawmakers were unable to pass it before the end of the last legislative session in May 2011.
Energy companies including Royal Dutch Shell Plc, Chevron Corp., Exxon Mobil Corp., Total SA and Eni SpA said in a joint presentation to lawmakers in 2009 that the proposed tax increases would make exploration “uneconomical.” They pump more than 90 percent of the country’s oil through ventures with state-owned Nigerian National Petroleum Corp.
The new draft includes plans to privatize the state oil company, create an asset management company and set up a new gas company. The bill proposes a ban on gas flaring in the course of oil production. The West African nation, which has the continent’s largest gas reserves of more than 180 trillion cubic feet, burns away most of the fuel it produces along with oil because it lacks the infrastructure to process it.
Nigeria produced an average of 2.1 million barrels of crude a day in July, according to data compiled by Bloomberg.
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