Friday, 18 June 2010

Shell waits out Nigeria energy sector reforms

Royal Dutch Shell has around $40 billion worth of investments in several deepwater oil projects in Nigeria put on hold due to uncertainty over planned reforms to the energy sector. The company is reluctant to make any commitments without clarity over the terms of the Petroleum Industry Bill (PIB) legislation which will affect the fiscal and regulatory framework in the OPEC member.

"Just looking at deep-water alone, we have a portfolio of about $40 billion worth of projects...but we will not be able to make a move on these until we have a landing on the PIB," said, Country chairman for Shell Nigeria, Mutiu Sunmonu.

The PIB is expected to make state oil firm NNPC more competitive and transparent. It is also expected to promote local oil company involvement in the industry, increase gas supplies to the dilapidated domestic power sector and encourage investment. However, international oil companies are fearful that the bill will impose higher taxes and royalties while overlooking other issues such as under-funding, corruption and security.

The bill, which has already been delayed by revisions and disagreements, has stalled once more as President Goodluck Jonathan and new Oil Minister Diezani Allison-Madueke revisit some of the issues.

Although the new administration has little time to push the bill through, with elections due by next April at the latest, Sunmonu said he was convinced that the differences can be overcome. He had also mentioned to the oil ministry the need to renew onshore licences which had lapsed under the previous administration, and was assured that the government intends to "dispose of all these legacy issues as quickly as possible."

Source: Reuters

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