Shell blasts proposed Petroleum Bill

  • Wednesday, February 24, 2010 - Emeka Ugwuanyi
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Ann Pickard Shell has sharply criticised Nigeria’s petroleum industry bill, saying the current draft puts at risk around $50 billion investment in new deepwater projects.

"If passed in the form currently proposed, the bill’s mistakes will take years to correct," Shell’s Regional Executive vice-president, Ann Pickard, said yesterday in Abuja. "The…priorities of government have been completely lost in a cumbersome document that lacks insight into the very basics of our industry," she stated.

The petroleum bill includes clauses that increases government’s financial take from upstream operations, especially in the deepwater. The bill, which will consolidate 16 separate existing petroleum laws, is being debated by the National Assembly.

Foreign oil firms have complained that state-owned NNPC’s main upstream partners — Shell, ExxonMobil, Chevron, Total and Italy’s Eni — have not been consulted sufficiently over the bill.

However, in a swift reaction, the NNPC disagreed with Shell, saying that the bill is not anti oil industry.

In a statement, signed by its Group General Manager, Public Affairs, Livi Ajuonuma, the NNPC described the anti- PIB comments as misplaced and totally different from the realities of modern fiscal system. 

"What Shell wants us to do is to keep subsidising the production of gas, which they end up exporting to their home countries to guarantee their national energy security. As I speak, Nigeria is still subsidising gas for export because the cost of producing gas is recovered from oil revenue. There is no country in the world that does not get value for its natural resources. But we are getting negative value from gas in Nigeria. The big question is if Nigerians are willing to forego subsidy from petroleum products which they consume, why should Shell or any other international oil company   operating in this country expect Nigeria to keep subsidising the gas that they export to other countries? That and many more abnormalities are what the PIB is seeking to correct,’’ Ajuonuma argued.

On the argument that the proposed bill will make the Nigerian Production Sharing Contract, PSC, the harshest in the world despite the so-called high risk environment, the NNPC remarked that such statement is 360 degrees different from verifiable empirical evidence.

"Currently Nigeria has one of the lowest government take in the world for PSC which stands at 42 per cent whereas the international average worldwide is 75 per cent. In Angola it is 78 per cent, in Norway it is 76 per cent even, Ghana which has not even started is proposing about 80 percent. What is even being proposed under the PIB is 70 per cent, which is still less than what Angola is getting today. So how can that be harsh? For 10 years we allowed them to operate the Liquefied Natural Gas, LNG, in Bonny without paying a kobo as tax to the government because of a tax holiday, all to encourage investment. Now Nigeria wants to maximize its gas potentials to the fullest," Ajuonuma explained.

He stated that the PIB is seeking to ensure that Nigeria and Nigerians reap the full benefits of their God given resources. "Research shows that 80 percent out of every one US dollar invested in the Oil Industry, goes offshore. That is why PIB is talking about local content. Under PIB no oil company can import cooks and stewards from their country to work in Nigeria as expatriates’’.

On the claim by Pickard that Shell missed an opportunity to make contributions in good time for the drafting of the bill, the NNPC described the claim as untrue.

NNPC group managing director Mohammed Barkindo said the bill included amendments following talks with its foreign partners, and that their opinions had been canvassed, the statement added.

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