By Matthew Green in Abuja
Published: February 24 2009 13:42 | Last updated: February 25 2009 03:43
Royal Dutch Shell issued a rare public warning to Nigeria on Tuesday that uncertainty over planned reforms to its oil and natural gas sector was deterring new investment vital to the industrys long-term health.
Ann Pickard, head of Shell in Africa, voiced concerns expressed privately by other oil groups at a conference with senior Nigerian officials in Abuja, the capital.
Energy companies are worried that the terms contained in a petroleum industry bill, which lays down the legal framework for the biggest shake-up of the industry since independence, will cost them billions of dollars in profits.
We do see that the legislation, the bill, will have a profound impact on the way the industry functions and how the companies move forward, Ms Pickard told the conference. Getting it right [is] absolutely essential. Getting it wrong will not be acceptable for Nigeria or the [oil companies].
Ms Pickards warning came against a backdrop of gloom in Nigerias oil industry, which is reeling from the slump in prices, persistent violence in the oil-producing Niger Delta and a chronic lack of investment.
Umaru YarAdua, Nigerian president, launched the reform process almost two years ago, in an effort to harness oil and gas revenues to power broader development.
The cornerstone of the plan is to transform the Nigerian National Petroleum Corporation, the state oil company, into a national champion capable of raising international capital to boost flagging investment in exploration and production.
Separately, the NNPC announced it had signed an accord to borrow $1.69bn (1.32bn, £1.17bn) from Shell to cover Nigerias share of costs for the Gbaran-Ubie gas project for 2009-11.
Also at the conference, Petrobrás, Brazils state-run oil company, said it expected to invest $2bn in exploration and production in Nigeria over the next five years.
Rudy Ferreira, managing director of the Petrobrás subsidiary in Nigeria, told Reuters he hoped the deep offshore oilfield Akpo, 20 per cent owned by Petrobras, would come on stream before April.
Copyright The Financial Times Limited 2009