Nigeria Content Online

The
initial momentum by government to pass the Petroleum Industry Bill
(PIB) may have waned, as the focus of elected officials is now mainly
on the forthcoming elections.

Despite
the promise by government that the Bill will be passed by the current
National Assembly, events in the last few months point to the contrary.

According to Bismarck Rewane, managing director, Financial Derivative Company, the Petroleum Industry Bill remains stuck.

“Oil
and gas reforms are unlikely in the face of elections. The Nigerian
president once again reiterated his wish that the Petroleum Industry
Bill (PIB) will be passed in this session of the National Assembly. The
petroleum minister had pronounced earlier that it would be passed last
September. It is probably inconceivable that the bill in its present
form will be debated and passed at the current session of the National
Assembly,” Mr. Rewane said.

The
Petroleum Industry Bill has been undergoing setbacks since the draft
bill was made available in 2009. The government has repeatedly said the
passage of the Bill is imminent, yet, revisions and debate have
hindered the process since then.

Earlier
in the month, the president said he expects wide-ranging reforms to the
mainstay oil and gas industry to be passed into law before the end of
the current parliament in May, according to a Reuters report.

The
legislation process has been held up for years, going from revision to
revision and committee to committee as the industry’s decision-makers
and government officials negotiate over its terms.

Industry
watchers say billions of dollars of potential investment, especially
from foreign oil companies, in the oil and gas industry are on hold as
a result of the uncertainty over the proposed legislation.

A
Reuters report stated that a joint Senate committee which has been
considering the bill for the past year has concluded its work, since
last year, paving the way for the upper house to begin voting on the
legislation clause by clause.

“The
joint committee on PIB has laid the report (the PIB) on the table in
the Senate. We have concluded work on it. It is now the property of the
Senate,” the report quoted Osita Izunaso, a co-chairman of the joint
committee.

Mr. IZunaso had also reportedly gone ahead to say that in the next few weeks, the Senate will consider it clause by clause.

Crucial decisions already on

Despite
the delay, some major multinational oil companies have already started
selling some of their oil blocks while some are shifting their
operations towards deep offshore and divesting some of the onshore
assets.

Shell,
which is in the process of selling more of its oil blocks, recently
sold some of its Nigeria assets to a consortium led by local companies.
In a statement issued by the company, it agreed to transfer its
interest in three production licences and related equipment in the
Niger Delta to a consortium led by two Nigerian companies.

“This
sale of assets supports the Nigerian government’s goal of expanding
opportunities for local energy companies,” Mutiu Sunmonu, managing
director, SPDC, said.

Experts
say the Petroleum Industry Bill (PIB) will re-write Nigeria’s age old
relationship with its foreign oil partners, altering and varying
everything, right from the fiscal framework for offshore oil projects
to the involvement of indigenous firms in the sector.

Dragan
Trajkov, an oil and gas analyst at Renaissance Capital, a finance
investment bank, said the potential PIB and the passed Local Content
Bill may have influenced their decision.

“We
do believe that the potential PIB and the already passed Local Content
Bill might have had some impact on their decision. Especially the fact
that the early version of the PIB was proposing that the majors may be
required to relinquish some of the undeveloped fields,” Mr. Trajkov
said.

He, however, said while this may not be a major determining factor, it would be a contributing one.

Proponents
of the bill say it will enable the Nigeria National Petroleum Company
(NNPC) to become more transparent, encourage local and foreign
investment, particularly promote local oil company involvement in the
industry, and increase gas supplies to the ramshackle domestic power
sector.