Nigeria's plans to reform its oil industry could jeopardise billions of dollars of investment, foreign oil firms have told parliamentary panels holding public hearing on a proposed new oil law for the country. The legislation is aimed at a drastic overhaul of Nigeria's oil sector, which provides more than 80 per cent of the OPEC member's federal revenue. It includes measures to transform the cash-strapped national oil company into a profit-driven enterprise, renegotiate oil production contracts, seize unused acreage from energy companies, and compel producers to refine more crude in Nigeria.
"This is not just an ordinary bill. It is a bill that hopes to change the way things are done in the upstream, midstream and downstream," said Osita Izunasa, the co-chairman of Nigeria's joint senate committee, said this week, as two parliamentary panels began separate hearings on the proposed law. But western oil companies told the hearings that the bill, in its present form, would make operating in Nigeria much more expensive.
"The aggregate impact of multiple taxes, high royalties, loss of incentives under the Petroleum Industry Bill as currently proposed will have a significant negative impact," Basil Omiyi, the head of Royal Dutch Shell in Nigeria, told the senate committee. His Exxon Mobil counterpart, Mark, told the hearing that the legislation would threaten the company's plans to invest US$60 billion (Dh220bn) in Nigeria in the next few years. "All new planned projects would be uneconomical," he said.