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Nigeria, Africa’s top oil producer, needs a balanced industry law favorable to the government and energy companies that pump the country’s crude, said Mutiu Sunmonu, chairman of Royal Dutch Shell Plc’s local unit.
A bill before lawmakers to reform the way Nigeria’s oil and gas industry is regulated and funded should “provide optimal revenue to the government whilst providing sufficient incentives for new investment to fuel growth,” Sunmonu said today at a conference in the capital, Abuja.
The Petroleum Industry Bill, which was sent to Parliament in July, proposes to boost the government’s share of revenue to 73 percent from 61 percent, Petroleum Minister Diezani Alison- Madueke said in a statement on Sept. 28. The bill was first sent to Parliament four years ago and wasn’t passed before the end of the last legislative session in May 2011.
Energy companies including Shell, Chevron Corp (CVX)., Exxon Mobil Corp (XOM)., Total SA and Eni SpA said in a joint presentation to lawmakers in 2009 that the proposed tax increases would make exploration “uneconomical.” They pump more than 90 percent of the country’s oil through ventures with state-owned Nigerian National Petroleum Corp.
The government is in talks with energy companies operating in the country to reach an agreement on the fiscal provisions in the draft legislation, Alison-Madueke said on Dec. 4. There is a significant disparity in the positions held by the government and oil companies on taxes, she said.
“It’s going to take a long while to truly negotiate,” Wale Tinubu, chief executive officer of Lagos-based exploration and production company Oando Plc, said today in Abuja. “There’s quite a number of things to discuss, and I find it very difficult to see how we would end up with a Petroleum Industry Bill by the end of this year.”
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