Nigeria, Africa’s top oil producer, said it’s in talks with Royal Dutch Shell Plc (RDSA), Exxon Mobil Corp. (XOM) and other energy companies to reach an agreement on tax demands proposed in draft legislation.
“There’s always the intent to try and strike a balance, particularly from the side of government,” Petroleum Minister Diezani Alison-Madueke said today at a conference in Abuja. “There seemed to be such disparity in terms of where we stood on the fiscals.”
The Petroleum Industry Bill, or PIB, is aimed at increasing the country’s share of profits from oil pumped off its shores. The government claims that extraction laws going back to 1993 are based on crude at $20 a barrel and unrealistic at prices that are now more than four times as high. The energy companies have warned Nigeria against driving away investment.
“You’ve got to have that interplay and balance between the fiscal package to be able to incentivize investments,” Mark Ward, managing director of Exxon’s Nigerian unit, said today.
The country is seeking to increase its share of profits to 73 percent from 61 percent, Alison-Madueke said Sept. 28.
The proposals would reduce Nigerian oil output by about 40 percent, Mutiu Sunmonu, Shell’s local chairman, said Nov. 30. Shell, Chevron Corp. (CVX), Exxon, Total SA and Eni SpA (ENI), which pump more than 90 percent of Nigeria’s oil in ventures with Nigerian National Petroleum Corp., said in a joint 2009 presentation that the higher taxes would make exploration uneconomical.
“The multinationals are really yearning for reform and so we are not fighting the PIB,” Sunmonu said today at the conference. “We just want to be sure that the pitfalls in the provisions of the bill are addressed very clearly before it comes into law.”
The bill was approved by Nigeria’s Cabinet and sent to Parliament in July, having initially been introduced to Parliament more than three years ago.
To contact the reporter on this story: Elisha Bala-Gbogbo in Abuja at [email protected]
To contact the editor responsible for this story: Dulue Mbachu at [email protected]