President Goodluck Jonathan

By Yemi Adebowale
                                  
Oil companies' objections to the proposed overhaul of the petroleum sector through the Petroleum Industry Bill are expected, but the reforms are necessary.

President Goodluck Jonathan stated this on Thursday in an interview with The Wall Street Journal and Dow Jones Newswires in New York, United States.

The government is proposing sweeping changes to the country's energy industry through the PIB, including a boost in the state's share of oil sales.

But Royal Dutch Shell and Exxon Mobil Corp., two of the biggest producers in Nigeria, have spoken out against the bill, saying it would make further investment in the sector uneconomical.

"The laws were enacted in the 1950s. It's now 2012," President Jonathan said in an interview with The Wall Street Journal and Dow Jones Newswires.

"The bill, which was introduced in parliament in July, would lead to a halt in new investments if passed in its current form because of onerous fiscal terms," Mark Ward, the head of Exxon's Nigeria operations said Thursday in Lagos, according to Agence France-Presse.

Ward, who also leads a grouping of major oil companies operating in Africa's top producer, said industry players shared the view that the current bill jeopardizes Nigeria's bid to boost new investment and output.

"If the bill passes without significant changes, "the government's aspirations to grow the business and the industry will not be met. Quite frankly, the extremely large investments that are needed are seriously at risk under the proposed PIB terms," he told a forum on the bill in Abuja.

Nigeria is Africa's biggest oil producer, with output of more than 2 million barrels a day of mostly high-quality oil. However, the state-owned Nigerian National Petroleum Corporation is widely seen as corrupt and inefficient.

Oil Minister Diezani Alison-Madueke said the reforms, which will also split the NNPC into several new companies and take steps to fight endemic corruption, are long overdue.

"The Nigerian government's portion of oil revenue is one of the lowest in the world and cannot be increased substantially under existing contracts with international oil companies.

"Nigeria has the lowest government take, which we felt was extremely punitive," Alison-Madueke said.