11 December 2012, Sweetcrude, Lagos – Nigeria’s Petroleum Industry Bill, PIB, is attracting increased controversies.
Industry players are alleging that the bill, now before the National Assembly, if passed into law, would deal a heavy blow to small field operators in the industry by way of harsh taxes and royalties rates.
They believe that the bill will also usher in harsh gas Fiscal Terms, which are not competitive. Operators also alleged that they are short changed in terms of ‘No Access to Assets’ adding that the proposed PIB JV terms are not competitive.
According to the Managing Director/CEO of Seplat Petroleum Development Company Limited, Mr. Austin Avuru, the Joint Venture, JV, oil terms are already one of the highest in the world, with additional risks relating to bunkering and security.
Avuru, who spoke at the just-concluded 18th Nigeria Economic Summit, Abuja said the country’s post-PIB period will not be a globally attractive fiscal regime and it will make many projects non-viable.
The Seplat boss explained that the bill did not completely address sectoral reforms while downstream problems will get worse.
He noted that issues bedeviling the nations refineries were not mentioned as
more uncertainties will trial the Midstream (Gas processing and Distribution.
However, Minister of Petroleum, Diezani Alison-Madueke, urged foreign oil companies in Nigeria to accept higher government revenues from crude production outlined in a PIB.
The Fiscal reforms in the proposed PIB would be the most comprehensive in four decades, even as she described the increase in government’s take from oil revenues as small, arguing that they were fair, given sustained higher oil prices.
“The PIB represents the largest overhaul of the government petroleum revenue system in the last four decades,” she said.
She outlined the objectives of the fiscal reforms to include:
•To simplify the collection of government revenues,
•To capture windfall profits in the case of high oil prices
•To collect more revenues from large profitable fields in the deep
offshore waters, and
•To create Nigerian employment and business opportunities, by encouraging investment in small oil and gas fields.