Despite assurances by the Federal Government that it is fervently pursuing the overhaul of the oil and gas sector, many operators fear that the coming general elections could further delay the passage of the Petroleum Industry Bill (PIB) as lawmakers would soon plunge headlong into campaigning for election.
These are some of the findings of BusinessDay at the just concluded Oil and Gas conference in Abuja.
Most of the operators are not convinced about government’s commitment to put in place an enabling environment for the industry to thrive. They complain about increasing cases of oil theft and several other challenges facing the industry.
They further expressed disappointment at the inaction of government on most issues affecting the industry and say that the current state of the industry poses a grave disincentive to foreign direct investment.
Another key concern, they said, was that it appeared that government had little respect for the sanctity of legally binding contracts, which according to them was causing a crisis of confidence in the industry.
A top executive of one of the major oil companies, who does not want his name disclosed, expressed the view that crude oil theft which is causing huge revenue losses to government should have been nipped in the bud if government had acted promptly.
“But today it has become a big problem for both the companies and the government itself.
“Because the government is not taking the necessary steps to address crude oil theft, the companies are not happy. The companies, through stealing of their crude oil, are losing more value in terms of their assets and investment in the country and this is affecting their global returns in the areas of investment,” said another operator.
The oil companies feel that the present government is hostile to them because of the way it handles their leases and licences, which were to have been ratified by the Yar’Ardua administration but are still pending.
The oil companies are also of the view that their inputs into industry issues are often not given due consideration by government.
The core of their misgivings revolve around the Petroleum Industry Bill, and Diezani Alison-Madueke, minister of Petroleum Resources, speaking at the conference, had said talks were ongoing with all stakeholders, as well as lawmakers, on the need to produce a Petroleum Industry Bill (PIB) that would be acceptable to all.
According to her, the bill represents a major step to consolidate and transform our oil industry. She however added that there were so many issues that would have to be put in place. “I want to reassure all stakeholders that lawmakers are working on the bill and it will soon be passed into law”.
Still, industry players expressed concern that the process was taking too long and that the final outcome might not provide sufficient incentives.
Wale Tinubu, chief executive officer of Oando, feared that the coming general elections would affect the PIB which has been stuck at the National Assembly, as lawmakers might soon turn their attentions to jostling for election.
According to Mutiu Sunmonu, the country chair of Shell companies in Nigeria, the discussions on the PIB are too slow for an industry that is as sensitive as oil and gas.
“Nigeria is not the only place that is desiring investment in the world, because of this, she is competing with emerging oil and gas producing countries in Africa, including its neighbours Ghana and Niger Republic.”
Sunmonu said Nigeria cannot afford to miss out, despite the fact that it is a challenging business environment. The cost of operations he said, are at the high end of the global scale, while contracting and licensing can be long and tortuous processes.
The PIB would restructure and create a new national oil company able to run profitably. It also seeks to raise the taxes oil majors pay on deep offshore fields, a proposal which oil executives say will further stifle investments.