The Minister of Petroleum resources, Mrs. Diezani Alison-Madueke
says discussions are on-going with the International Oil Companies (lOC’s)
operating in Nigeria to tighten the fiscal terms under the proposed Petroleum
Industry Bill (PIB), currently before the National Assembly.
The Minister made the remark at a panel discussion on “PIB and the
Future of Nigeria’s Oil Industry’’, in Abuja at the 18th Nigeria Economic
Summit.
Future of Nigeria’s Oil Industry’’, in Abuja at the 18th Nigeria Economic
Summit.
She noted that contrary to the view of
the IOCs that the fiscal terms as contained in the PIB were harsh, they are
fair.
the IOCs that the fiscal terms as contained in the PIB were harsh, they are
fair.
According to her, Nigeria still remained one of the most
attractive countries in terms of fiscal regime or ‘government take’, adding
that the total ‘government take’ in the PIB, was 73 percent, up from 61
percent in current deals with the IOC’s.
attractive countries in terms of fiscal regime or ‘government take’, adding
that the total ‘government take’ in the PIB, was 73 percent, up from 61
percent in current deals with the IOC’s.
She said the current deepwater terms were negotiated in 1993, when
oil prices were just $20 a barrel and that section 16 of the Deep Offshore Act
prescribes that changes be made to this particular fiscal regime to restore
benefits to the government commensurate with increased oil prices, once oil
prices have exceeded $20 per barrel in real terms.
oil prices were just $20 a barrel and that section 16 of the Deep Offshore Act
prescribes that changes be made to this particular fiscal regime to restore
benefits to the government commensurate with increased oil prices, once oil
prices have exceeded $20 per barrel in real terms.
According to her the Act also prescribes that changes be made 15
years after the commencement of the deep offshore act, and that Nigeria was not
alone in the tightening of the fiscal terms.
years after the commencement of the deep offshore act, and that Nigeria was not
alone in the tightening of the fiscal terms.
She said the goal was to achieve a
`fair balance between government and contractor share to ensure that risks do
not outweigh rewards’.
`fair balance between government and contractor share to ensure that risks do
not outweigh rewards’.
She said the PIB introduced a price-based royalty for crude prices
beyond 70 dollars per barrel, and all cost-based incentives have now been
replaced with production-based incentives, because government revenues accrue
from production and not from cost.
beyond 70 dollars per barrel, and all cost-based incentives have now been
replaced with production-based incentives, because government revenues accrue
from production and not from cost.
The Minister explained that the reforms in the PIB had been
divided into two areas namely the fiscal and non-fiscal reforms, where the
non-fiscal reforms relate to institutional and policy reorientation, while the
fiscal reforms represent the `largest overhaul of government petroleum revenue
system in the last four decades’.
divided into two areas namely the fiscal and non-fiscal reforms, where the
non-fiscal reforms relate to institutional and policy reorientation, while the
fiscal reforms represent the `largest overhaul of government petroleum revenue
system in the last four decades’.
She identified the central objectives of the fiscal reforms to
include simplification of revenue collection by Government, capturing of
windfall profits in the event of high oil prices as well as the collection of
more revenue from large profitable fields in deep offshore waters.
include simplification of revenue collection by Government, capturing of
windfall profits in the event of high oil prices as well as the collection of
more revenue from large profitable fields in deep offshore waters.
According to the Minister gas fiscal terms are now fully
integrated into the oil fiscal terms which is the first time, this has happened
in Nigeria. The country has 187 trillion cubic feet of proven gas
reserves.
integrated into the oil fiscal terms which is the first time, this has happened
in Nigeria. The country has 187 trillion cubic feet of proven gas
reserves.
In his remarks, Abiye Membere, the NNPC Group Executive Director,
Exploration and Production said dialogue remain the panacea to addressing all
grey areas in the PIB.
Exploration and Production said dialogue remain the panacea to addressing all
grey areas in the PIB.
Also speaking, the Managing Director of Seplat Petroleum
Development Company Mr. Austin Avuru cautioned against reducing the
PIB discussions to fiscal issues such as `tax and royalty’.
Development Company Mr. Austin Avuru cautioned against reducing the
PIB discussions to fiscal issues such as `tax and royalty’.
“The cardinal point of the reforms is to make institutions more
effective in the oil and gas sector in the interest of all,” he said.
effective in the oil and gas sector in the interest of all,” he said.
He implored government to address key issues killing investment in
the country.
the country.
