Petroleum Africa
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Monday, May 13, 2013
At just about every industry event that has taken place over the past few years that has focused on the West Africa region or Nigeria, the government of Nigeria or its state-run firm NNPC has talked about and promoted the very much delayed Petroleum Industry Bill (PIB). This year’s Offshore Technology Conference (OTC) that took place in Houston earlier in May was no exception. At OTC Andrew Yakubu, group MD of NNPC, said that the PIB would herald a new operational vista for the petroleum industry in Nigeria. There were also words bandied about such as “groundswell support.”
Yakubu was quoted in a statement from NNPC as describing the PIB as an essential tool for the sustainable development of Nigeria’s petroleum sector, adding that the proposed law presents multi-dimensional approaches to the nation’s oil and gas resource management.
While the PIB may have seen some “groundswell support” in Nigeria, foreign operators are less than enthusiastic when they talk about or are asked about the legislation. Just recently Mark Ward, the head of ExxonMobil in Nigeria, said that the PIB would make Nigeria one of the world’s harshest investment climates as far as the oil industry is concerned. Nigeria’s largest producer, Shell, has been extremely vocal on the pitfalls of the PIB for foreign operators. Many of these operators have stated that new investment in Nigeria would be stunted to the sum of $109 billion in the coming years.
Although the PIB may hinder investment, in the short-term operators really have nothing to fear from it as the bill is unlikely to be made into law anytime soon. The PIB has been in the works for a long time and over the years there have been announcements that the bill was close to becoming law; this has yet to happen. Meanwhile the uncertainty over the bill, passed or not, has not left the industry unscathed. Both investment and reserves have dropped over the past couple of years. Nigeria’s Department of Petroleum Resources said the country’s recorded reserves had fallen to 36.5 billion barrels from 37 billion barrels in 2010 as a result of a slowdown in investment linked to uncertainty over the bill.
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