A new draft of Nigeria's long delayed oil bill, whose passage is needed to unblock billions of dollars of stalled investment into exploration and production, will be finalised this week, sources close to the matter said. A copy of the 200-page Petroleum Industry Bill (PIB) obtained by Reuters includes plans to partly privatise and list the state oil firm, tax oil company profits at 20 percent for deep offshore and 50 percent for shallow or onshore, and give the oil minister supervisory powers over all institutions in the industry.
Current oil firm profit taxes are not published. A spokesman for Nigeria's leading operator Shell said he did not know what current tax rates were. The PIB has been years in the making and the delays have caused uncertainty over the future framework of working in Nigeria, costing the industry billions of dollars of potential investment and the government much-needed revenues. Without it, most analysts expect oil production in Nigeria to decline substantially over the next few years. Nigeria exports more than 2 million barrels a day (bpd) of crude oil popular with U.S. buyers because it is light and easy to refine. China and India are also growing takers of Nigerian crude.
Even when this version gets to parliament, there is no guarantee lawmakers will push it through, as powerful vested interests could block or delay it, as has happened in the past. President Goodluck Jonathan is explicitly behind this version, and it was drawn up by a taskforce of senators his administration appointed, but even though his party has a majority in both houses of parliament it could still stall.
The bill as drafted would also roll Nigeria's various regulatory bodies for upstream and downstream into one, and give Oil Minister Diezani Alison-Madueke power to pick who runs it. Placing all institutions concerned with oil under her supervision may upset those who hoped the bill would curb her already substantial powers. Previously the downstream regulator was independent of the ministry.
Alison-Madueke signed a 20-year oil license in February with U.S. oil giant Exxon on one of Nigeria's largest oil assets, which produces over 500,000 barrels per day, but the terms were kept private. This license renewal comes despite the minister saying for years that the delay to the PIB was holding contracts like these up. Alison-Madueke said this week that similar renewals with Shell and Chevron would be signed by June. It is not clear whether those licenses include exemptions from any change of terms brought about by the new PIB.