Diezani Allison-Madueke was appointed as the Oil Minister of the recently reconstituted cabinet of the Federal Republic of Nigeria. She was assigned to the post by Acting President Goodluck Jonathan.
Originally uploaded by Pan-African News Wire File Photos
Reuters
2010/06/17 01:17:06 PM
Royal Dutch Shell has some $40bn worth of potential investment in deepwater oil projects in Nigeria on hold amid uncertainty over planned reforms to the energy sector, a senior executive told Reuters.
Mutiu Sunmonu, country chairman for Shell Nigeria, said it was difficult to make commitments without clarity over the terms of the Petroleum Industry Bill, legislation which will change the fiscal and regulatory framework in the OPEC member.
“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 at his Lagos home late yesterday.
“(That is) potential investment that we are not able to sign off on at this time,” Sunmonu said, adding the investment covered six or seven deepwater projects whose timeframe depended on how quickly they could be funded and executed.
Shell said in February 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 (bpd) by 2015, equivalent to half the country’s current installed capacity.
Nigeria says the PIB will make state oil firm NNPC more competitive and transparent, encourage investment, promote local oil company involvement in the industry and increase gas supplies to the dilapidated domestic power sector.
But international oil companies are worried 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 Oil Minister Diezani Allison-Madueke revisit some of the issues.
With elections due by next April at the latest, the new administration has little time to push the bill through, but Sunmonu voiced optimism that differences could be overcome.
“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 oil 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 said security in the Niger Delta, where three years of militant attacks since early 2006 have prevented Nigeria from pumping much above two thirds of its 3 million barrels per day (bpd) capacity, had greatly improved since an amnesty last year.
But he said 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 said.
Although only a portion of that stolen oil is spilled, it is around twice the level leaking into the US 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.
The Niger Delta, home to Africa’s biggest oil and gas industry, has suffered decades of pollution from spills which have been left to fester, damaging the air, soil and water.
The US government’s all-out fight to contain the BP oil spill in the Gulf of Mexico is a marked contrast to the situation in the Niger Delta, leading local communities and campaigners to ask why Shell and other international oil firms in Nigeria are not paying compensation.
Sunmonu said the comparison was not fair, noting that between 2000-2007 10 000 barrels a year were spilled on average from Shell operations in the Niger Delta, 70%-75% of them the result of sabotage or oil thieves drilling into pipelines.
In 2009, just 2% of spills were caused by factors within Shell’s control, he said.
“It is incorrect to draw a parallel ... The law in Nigeria is very clear. We do not pay compensation for sabotage spills.
And I think the intent of the law is correct,” he said.
“If you pay for sabotage spills then you are only fuelling more sabotage and more spills. Where a spill happens as a result of our own error or equipment failure, we do pay compensation.”
The Anglo-Dutch giant says it paid $4 million in compensation last year and cleans up all spills whatever their cause, although communities or armed gangs sometimes deny it access to spill sites.
Sunmonu said he was not concerned by China’s reported ambition to secure 6bn barrels of Nigerian oil, saying Shell was “not afraid of competition.”
Analysts say China is most likely to access Nigerian reserves by snapping up acreage in new licensing rounds rather than buying existing operations. But China has approached the Nigerian government about some blocks held by Western firms.
Sunmonu said he was not aware of any direct approach to Shell by China about buying stakes in Shell Nigeria joint ventures.
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