Royal Dutch Shell has put $40bn worth of potential investment in deepwater oil projects in Nigeria on hold amid uncertainty over planned reforms of the energy sector, a senior executive told Reuters late on Wednesday.
The Country Chairman for Shell Nigeria, Mr. Mutiu Sunmonu, said it was difficult to make commitments without clarity over the terms of the Petroleum Industry Bill, a legislation that would change the fiscal and regulatory framework in the country.
”Just looking at deepwater alone, we have a portfolio of about $40bn worth of projects, but we will not be able to make a move on these until we have a landing on the PIB,” he said in an interview in Lagos on Wednesday.
“That is potential investment that we are not able to sign off on at this time,” Sunmonu said, adding that the investment covered six or seven deepwater projects, whose timeframe depended on how quickly they could be funded and executed.
Shell, according to Reuters, had said in February that the oil industry as a whole invested around $4bn in Nigerian deepwater projects in 2009, and that it expected offshore production to rise to about 1.5 million barrels per day by 2015, equivalent to half the country‘s current installed capacity.
The Federal Government had said the PIB would make the Nigerian National Petroleum Corporation more competitive and transparent, encourage investment, promote local oil companies’ involvement in the industry and increase gas supplies to the power plants.
But international oil companies are worried that the bill will impose higher taxes and royalties, while failing to address key issues of under-funding, corruption and security.
The bill has been repeatedly delayed by revisions and disagreement. It has stalled again in its final stages as President Goodluck Jonathan, who took over last month following the death of late President Umaru Yar’Adua, and new Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, revisit some of the issues.
With elections due next April at the latest, the new administration has little time to push the bill through, but Sunmonu voiced optimism that the differences could be overcome.
He said, “The present government is determined to pass the PIB. I know the minister is planning to have a meeting with captains of industry to further consult with us on how to close the gap.”
Sunmonu also said he had brought to the petroleum ministry‘s attention the need to renew onshore licences, which lapsed under the previous administration, saying government had pledged to ”dispose of all these legacy issues as quickly as possible.”
Sunmonu added that security in the Niger Delta, where three years of militant attacks since early 2006 had prevented Nigeria from pumping much above two thirds of its three million barrels per day capacity, had greatly improved since an amnesty programme was launched last year.
But he said that bunkering; the theft of industrial quantities of crude oil had increased.
”I think there is an increase in the level of bunkering in the last few months, there is an upward swing. I always use an estimate of about 100,000 bpd and I don‘t think that would be too off the mark,” he stressed.
Although only a portion of that stolen oil is spilled, it is around twice the level leaking into the United States, Gulf of Mexico, according to a team of US scientists, who on Tuesday raised their high-end estimate to between 35,000 and 60,000 bpd.
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