Oil majors continue to voice concern over certain provisions in the pending Nigeria Petroleum Industry Bill (PIB)
It has been reported that the oil companies argued that the fiscal terms in the proposed reform bill are harsher than the current fiscal regime and the rest of the world and have expressed concern that the fiscal terms in the current Petroleum Industry Bill (PIB) would put the deepwater potentials at risk.
According to the document, the fiscal terms proposed by the PIB will make all planned deepwater projects non-viable, resulting in quick decline of deepwater production. It also disclosed that several non-fiscal issues such as lease terms and contract sanctity would create uncertainty and affect global competitiveness of deepwater projects in Nigeria.
Nigeria currently has five deepwater oil fields –
Total’s Akpo and Usan
But the operating companies said deepwater projects were technically and financially more challenging compared to onshore projects.
They said with world-class projects worth over $40 billion in investments, deepwater was delivering 900,000 barrels of crude oil into the country’s daily output as at 2012.
With $15 million, an operator could drill an onshore well, while a deepwater well cost $100 million, the oil companies argued. They also noted that while less risky conventional technology was used in onshore production, deepwater used more risky complex technology.
According to them, the government contributes between 55 to 60 per cent of investments in the onshore production; while the oil companies provide 100 per cent of funds for deepwater investments.