Lagos — Nigeria's biggest petroleum industry player, Shell, is still playing it hard on the country following the dispute over propositions in the Petroleum Industry Bill (PIB) the passage of which is lingering in the National Assembly.
The company which operates choice petroleum assets in the country as part of the privileges of its British origin is keeping faith with the threat of diverting investments from Nigeria if it finds the outcome of the new industry law unacceptable.
While other companies like Total and Chevron are pressing on with scheduled projects in the country, a Shell spokesman, Mr. Tony Okonedo, told agency sources weekend that the company was still holding back $40 billion (N6.0 trillion) worth of investments until the law is passed.
A plats story quoted Mr. Okonedo as saying that the Anglo-Dutch major which has led opposition against the bill is insisting on favorable fiscal laws before it could put investment dollar on the table.
He said outcome of the PIB at the legislature would be key to attracting the necessary investment to meet a projected fivefold rise in domestic gas demand to around 5 billion cubic feet/day by 2013, Shell said.
In a brief updating its activities in Nigeria and made available to Platts Friday, Shell said it had, along with other oil companies operating in Nigeria, submitted proposals to the government on how to meet the country's targets, particularly as regard to the supply of gas to the power sector.
The government is developing new oil and gas industry legislation in a petroleum industry bill which among other things proposes new parameters affecting capital investment, Shell said.
Getting the legislation and the national gas master plan right is essential to attracting the billions of dollars of investment that are needed to meet government goals to grow Nigeria's gas supply to consumers and the power sector, Shell said.
Shell said in February that the delay in passing the legislation that seeks to radically overhaul the Nigerian petroleum sector could hamper investment worth over $50 billion into the industry.
Mr. Okonedo told Platts that Shell alone had put on hold $40 billion worth of investments in offshore projects.
The National Assembly is finalizing the legislation that would create a profit-driven national oil company and seize more control over its natural resources. The draft bill empowers government to renegotiate old contracts, impose higher costs on oil companies and retake acreage that is yet to be explored.
But foreign oil companies including ExxonMobil, Chevron, Eni and Total have warned the draft in its current format could threaten billions of dollars of investment if they go ahead.
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The main areas of dispute between the government and oil companies include higher royalty payments, industry-wide taxes on profits and revenue sharing.
Under the gas master plan launched in 2008, Nigeria is seeking around $30 billion (N4.5 trillion) from local and foreign companies to develop infrastructure that will aid the growth in domestic gas demand.
Shell said that apart from the petroleum bill, Nigeria must also revise the gas-pricing framework in the master plan that would guarantee profit for investors, if it wants to attract the much desired investments.
Shell recently launched a $2 billion investment program to harness flared gas from its oil fields in Nigeria and channel it to the power sector.
Power tariffs need to be deregulated and freed from unsustainable subsidies, the company said.
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