The non-passage of the various segments of the Petroleum Industry Bill (PIB) which is expected to clear uncertainty in the oil industry and encourage new investments, have continued to negatively impact the sector, plaguing it with uncertainties and denying it of investment inflow.
Further complicating the situation was President Muhammadu Buhari’s decision to refuse assent to the PIGB recently, sending off the wrong signals to the investment community according to experts.
With funding reducing due to uncertainty in Nigeria’s oil and gas investment environment, new frontier basins with estimated 65 billion barrels of oil equivalent have been left unexplored over the years and may continue to remain so according to industry stakeholders.
There are considerable unexplored frontier basins in the deeply onshore, offshore and ultra-deep offshore Niger Delta believed to be over 50 billion barrels of oil equivalent and about 10-15 billion barrels of oil equivalent in the Lagos Abrupt Margin and Upper Benue Trough, e360 learnt.
However, these frontiers have been left unexplored unfortunately due to the uncertainty in the industry, which has resulted in low level of drilling activity with reserves replacement ratio of the country extremely low.
For Nigeria’s oil and gas reserves to grow and for companies to invest in exploration and development of assets, experts insist that there must be a clear, fair and stable fiscal and regulatory regime that allows long term planning and investing.
Sadly the PIGB which is intended to bring some level of clarity and boost confidence about the nation’s resolve to reform the sector, was recently turned down by the president, a move experts say they didn’t see coming.
In Vetoing the bill, the president, according to Senator Ita Enang, Presidential Liaison to the National Assembly-Senate, claimed the 10percent of generated revenue to be retained by the PRC was major reason it was refused. Enang said the retention “unduly increases the funds accruing to the Commission to the detriment of the revenue available to the Federal, States, Federal capital Territory and Local governments in the country.”
But reacting to the development Executive Director of CISLAC Auwa Musa Rafsanjani said, “It’s unfortunate that the president refused to ascent to this bill after promising to reform the oil and gas sector in Nigeria.”
He added, “It’s so frustrating and disappointing that this government has spent its tenure without properly addressing this key important sector of our economy where corruption, inefficiency, criminality, community conflict and sabotage have been institutionalized. It’s a big failure for this government and lost of opportunity to reform the sector into global standard one.”
Under the current situation, experts say there is need for government authorities to be creative on incentives for exploration otherwise reserves replacement and production will continue to decline.
“Given the uncertainty in the industry Nigeria is no longer the preferred terrain for exploration in Africa. There is stiff competition from East Africa with large volumes of gas discovered in Mozambique, Tanzania, Kenya and Angola. These countries have rolled out attractive terms and incentives designed to encourage exploration,” said energy analyst, Dan Kunle.
To get back in the game, he said Nigeria must channel all efforts towards encouraging more petroleum sector investment for reserves to improve. “There is now the urgent need to encourage aggressive exploration for oil and gas to replace reserves and develop exploitation projects,” the analyst said.
Wumi Iledare, a professor of petroleum economics and policy research, told e360 that assent to the PIGB would have taken away the uncertainty that has been in the industry for so long. “To start with, it will show that Nigeria is now serious because the bill is about accountability and transparency… and that will lead to making us more attractive to investors,” he said.
The Petroleum Industry Bill has been in the making for about 18years. For ease of passage, the 8th National Assembly broke it into segments namely; the recently vetoed Petroleum Industry Governance Bill (PIGB), the Petroleum Host and Impacted Community Bill (PHICB), Petroleum Industry Fiscal Bill (PIFB) and Petroleum Industry Administration Bill (PIAB).
The National Assembly had assured of the passage of all segments of the bill before the end of its tenure. But experts say achieving that is near impossible, especially with the non-assent of the PIGB.