Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

An unidentified man walks along oil pipelines in Nigeria.

GEORGE OSODI/The Associated Press

Nigeria's Oil Minister urged foreign majors on Tuesday to accept higher government revenues from crude production outlined in a draft oil bill, but Exxon Mobil said that the new terms risked stifling investment.

Speaking at an economic summit in Abuja, Diezani Alison-Madueke said fiscal reforms in the proposed Petroleum Industry Bill (PIB) would be the most comprehensive in four decades.

She described the increased government take from oil revenues in the PIB as small and said they were fair, given sustained higher oil prices.

Story continues below advertisement

"Nigeria is not alone in the tightening of fiscal terms," she said. "The goal has always been to find a fair balance between the government and the contractors' shares."

President Goodluck Jonathan presented the bill to parliament in August and it is still being discussed.

Oil majors have cried out about proposed tax terms in the bill, with Royal Dutch Shell PLC and Exxon Mobil Corp. saying they would make exploration deep offshore, which is the key to growing Nigeria's reserves, non-viable.

Nigeria's tax and royalty regimes are complex and often highly secretive. Little is known about existing terms on offshore contracts, but oil majors say the PIB has worse terms than existing ones.

"The government is not in the business of oil and gas to make a loss for the country. At the same time, the intent is to remain competitive to attract investment," Ms. Alison-Madueke told delegates at the conference.

She has said after the changes were made in the PIB, Nigeria's "government take" on offshore projects would be around 73 per cent, lower than in rivals Angola, Norway and Indonesia.

Nigeria is Africa's biggest oil producer, exporting more than 2 million barrels per day (bpd), and it also holds the world's ninth largest gas reserves, but years of uncertainty over the fiscal terms of the PIB have discouraged investment.

Story continues below advertisement

"The PIB has been 12 years in the making. If it was such an easy bill, it would have been hashed out a long time ago," Ms. Alison-Madueke said.

"I don't think any position you take on a bill such as this could be perfect … but I think we did a fairly equitable job."

The managing director of Exxon Mobil's local unit, Mark Ward, said worse terms would discourage investment.

"Quite frankly some of the thresholds that have been laid out … are not something I think any businessman in this forum here would invest in," he said. "The risk … that is involved in it versus the return ... it's safer to drop it in the bank."

Investment was needed to stop output falling, he said.

"It takes an overall competitive fiscal package to be able to continue to grow … If the government gets a bigger piece of a much smaller pie, that's not the right answer."

Story continues below advertisement

Exxon signed 20-year oil licence renewals on Nigerian onshore assets producing around 550,000 bpd in February, and other oil majors are also seeking renewals. It is not clear whether that these would fall under the PIB.

"You can change laws … but changing contracts by legislative fiat is a very dangerous thing," Mr. Ward said.

The PIB's comprehensive nature – covering everything from fiscal terms and reform of the state oil company to penalties for environmental infractions and funds for communities living on oil fields – is partly why it has been so hard to agree on.

In a speech, the head of local operator Seplat Petroleum, Austin Avuru, suggested that the fiscal regime be hived off from the rest of the bill and quickly passed, to end uncertainty holding back billions of dollars of investment.

Ms. Alison-Madueke said this had been considered and rejected in the drafting of the bill, which would remain comprehensive.

Ms. Alison-Madueke told Reuters after the panel that Nigeria still hoped to hold a licensing round for marginal oil fields by the end of the year.

Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies