National Assembly Complex

Chika Amanze-Nwachuku

Multinational oil companies are said to have spent millions of dollars lobbying the National Assembly and top government officials to address their concerns over the fiscal provisions in the new Petroleum Industry Bill (PIB).

THISDAY gathered at the weekend that in letters and closed-door meetings, chief executives of oil companies had lobbied top government executives and lawmakers to make sufficient changes in the fiscal terms so as to encourage investments in the oil and gas sector.

A presidency source who confirmed the intense lobby by both local and foreign oil companies and politicians said the government may be compelled to modify the fiscal terms as a response to reservations expressed by oil companies.

Oil majors, Shell Petroleum Development Company, Mobil Producing and Total had picked holes in the fiscal terms as provided for in the new draft bill, contending that the tax terms are uncompetitive and could make offshore oil and gas projects unviable. The oil companies are also opposing the deepwater profit tax, saying it was a worse deal than most oil majors were getting on existing deep water project.

Chief executives of the international oil companies (IOCs) had at different forums, stated that the bill, if passed without significant changes, will stifle investments in the oil and gas sector and hamper government's aspirations to grow the business and the industry.

Besides, the northern governors are also opposing the exclusion of the formation of a limited liability company to be known as the Oil Exploration Agency (OEA) in the PIB currently before the National Assembly.  Their contention, according to THISDAY investigation, was that the exclusion of the formation of the OEA, meant that government wants to discontinue oil search in the North. 

But the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke who provided further insight on why the Federal Government was proposing a review of the fiscal terms in the Production Sharing Contracts (PSCs) for deep water fields in the draft PIB, explained that the increase in government take in the Deep Offshore blocks from the current level of 61 percent to a new figure of 73 per cent was necessitated by prevailing realities in the global oil and gas industry.

She said based on prevailing realities in the global oil industry, it was only natural to review the terms of the PSC to reflect the current trend.

The novel 1993 PSC agreement was based on $20 per barrel price for crude oil real time but records indicate that since the start of production in the PSC fields, crude prices have been on the upward swing thus the consensus to have a review of the terms.

The Petroleum Minister maintained that the new PIB provides for a refreshing fiscal regime which has strong incentives for enhanced exploration of new frontiers especially in the Inland Sedimentary Basins as well as providing strong support base for the complete activation of the Gas Master Plan.

She said, under the new arrangement, fiscal regime would be anchored on royalty and tax predicated on production as opposed to terrain and investment as was previously done. She pointed that the reforms would split the NNPC into several new companies and take steps to fight endemic corruption in the oil and gas industry.