Big commitments and changes in Nigeria’s oil sector

Nigeria’s acting President has made commitments to overhaul the biggest oil and gas industry in Africa.

Petroleum Industry Bill
President Goodluck Jonathan assumed complete presidential power after Nigeria’s President Umaru Yar’Adua was taken ill with a heart condition in Saudi Arabia several months ago. In his new position, Jonathan is pushing to approve the Petroleum Industry Bill as soon as possible and has made it one of his top priorities. The bill will rewrite partnerships between Nigeria and companies such as Royal Dutch Shell, ExxonMobil and Chevron.

As part of the bill, Nigerian National Petroleum Corporation, which has been suffering from lack of funding, will be split in to small profit driven companies. Also, there is the possibly of an increase in taxes and royalties even on international companies that already have investments in Nigeria and are already partners with the country.

Challenges
There are however, two factors that may cause problems for Jonathan’s proposed bill. A high level of violence in the country has been a considerable problem in the past. Shell’s Forcados-Yokri project was abandoned due to attacks and the project still remains unfinished due to a lack of funding. Also, especially over the last four years, there have been numerous kidnappings of oil workers and damage done to installations and pipelines. This has cut the country’s production by nearly 28% and deterred companies from investing in new projects.

The second problem comes from the bill itself. International companies have heavily opposed the increase in taxes and royalties as they believe the new imposed fees will deter capital intensive investment.

Newly proposed projects
Nigerian National Petroleum Corporation, Onado, African Petroliam, Mittal (India) and an additional company have put forward plans to construct three new refineries in Nigeria. Two facilities will process crude and be located in the South West and Niger Delta. The third facility will be in the North Central Zone and will be a gas facility and feed the proposed Abuja-Kaduna-Kano gas pipeline.

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/02032010/big_commitments_and_changes_in_nigeria%E2%80%99s_oil_sector/