NNPC group managing director Andrew Yakubu said the PIB “will promote transparency, accountability, good governance and see a level playing field for players in the Nigerian oil industry”.
The PIB will “doubtless attract the much needed investment in the Nigerian petroleum sector”, Yakubu said.
Africa expert, Akshai Fofaria of Pinsent Masons, the law firm behind Out-Law, said that the passage of the proposed law could also help to develop Nigeria's gas resources, which he said could not happen without significant investment in gas infrastructure.
"It would be interesting to see how Nigeria intends to solve the infrastructure problem for gas production," he said. "It has been discussed for a long time, with options proposed including overhauling the regulatory regime to provide for incentives or obligations to reserve gas for the domestic market, altering local gas prices to better reflect the costs for developers and encouraging the power sector to pay commercial rates for gas in order to pull investment into the sector. Nigeria is essentially an unexploited gas field, even though it has largely been exploited for oil over the past few decades.”
However, Fofaria said that “while the opportunities in this sector are breathtaking, the deadlock in passing the PIB is creating additional uncertainty for the industry, which is delaying the development of the necessary pipeline and processing infrastructure."
The PIB was initially proposed in 2008 and presented to the National Assembly in July 2012 as an executive bill by the country’s president, Goodluck Jonathan. The bill is designed to encourage further investment in the petroleum industry, boost government revenue and create commercially-oriented and profit-driven oil and gas organisations.
Towards the end of last month, Nigeria’s Daily Trust newspaper quoted Senate leader Victor Ndoma-Egba as saying that legislators were in “no hurry” to pass the bill, which he said was “quite technical and as such demands that more time be given to it before it is passed”.
A detailed review of the bill published by Ernst and Young in 2012, written by analysts including Pedro van Meurs, a consultant on oil and gas issues, said the proposed legislation has “excellent upstream provisions related to transparency and non-confidentiality... which are among the most advanced in the world and make Nigeria a leader in Africa in this respect”.
However, the review said a “very negative provision” was that the country’s president would have the power to grant licences and leases “without a competitive process or any other process”. The review said “this leaves the door wide open to political favouritism and corruption in a manner that has been practiced in Nigeria in the past”.
Ernst & Young Nigeria said the petroleum industry is a key industry in Nigeria with oil receipts in 2012 accounting for about 78% of total revenues to government and contributing about 14.27% to the country’s gross domestic product.
According to the US Energy Information Administration (EIA), Europe is the largest regional importer of Nigerian oil. In 2012, Europe imported 889,000 barrels per day (bbl/d) of crude oil and condensate from Nigeria, accounting for 44% of total Nigerian exports.
For the past decade, the US imported 9% to 11% of its crude oil from Nigeria. However, the EIA said this share fell to an average of 5% in 2012 and 4% from January to August 2013. The EIA said: “As a result, Nigeria has fallen from being the fifth largest foreign oil supplier to the US in 2011 to eighth in 2013.”
The EIA also lists Nigeria as the largest holder of natural gas proven reserves in Africa and the ninth largest holder in the world. However, the EIA said “natural gas production is restricted by the lack of infrastructure to monetise natural gas that is currently being flared”.
EIA figures indicate that Nigeria flares the second largest amount of natural gas in the world, following Russia. Natural gas flared in Nigeria accounts for 10% of the total amount flared globally, but has decreased in recent years from 575 billions of cubic feet (bcf) in 2007 to 515 bcf in 2011, the EIA said.