Business

Oil Firms Battle Plans For Sector’s Overhaul

Worried by a Chinese company’s bid for stakes in prime fields, major oil groups have scheduled a meeting this week with government officials on an overhaul of sub-Saharan Africa’s biggest energy industry.

Royal Dutch Shell, Chevron, ExxonMobil and others hope to persuade the government to ease the tough new terms in the draft legislation as they are also locked in negotiations over leases of oil fields they have held for 40 years, with the government asking for billions of dollars to renew them.

The Financial Times reported last month that CNOOC, one of China’s big three energy groups, had proposed buying 49 per cent stakes in 23 blocks, including some of those up for renewal, in order to secure up to a sixth of the country’s crude reserves.

The Minister of state for energy, Odein Ajumogobia confirmed that “there’s a proposal from CNOOC that the government is considering on its merits, saying these leases expired a year ago and we’re anxious that they are renewed as those two discussions are going on simultaneously.”

One-year extensions taken out by Exxon and Chevron will run out at the end of next month while Shell won a court injunction blocking any change of ownership on its leases.

Ajumogobia stated that there was no “bidding war” for the leases but industry insiders said the Chinese interest had strengthened the government’s hand in demanding higher renewal fees. Chevron’s initial offer was about $100m (£62.56m, €67.79m) and ExxonMobil proposed $78m, while the government has asked for $3bn and $2.5bn respectively, said industry insiders.

The Petroleum Industry Bill would raise the government’s take from the foreign companies’ share of oil and gas ventures to 93 per cent from 82 per cent, according to KPMG, the audit firm, placing Nigeria’s regime among the world’s strictest.

Mark Ward, managing director of Exxon in Nigeria, has said that under the draft terms “all new planned projects would be uneconomical”.

Ajumogobia said the groups were assuming “extraordinarily high costs, some of them unaccountable in their projections, including an emergency scenario in the oil-producing Niger Delta.

After several militant commanders who orchestrated years of attacks on the delta’s oil facilities accepted a government amnesty, there are tentative hopes of a reduction in the insecurity that has trimmed Nigeria’s production by at least 1m barrels a day.

spokesman for the Nigerian National Petroleum Corporation (NNPC), which would be restructured under the bill, Levi Ajuonuma said What Nigeria wants is what will prevail as We will listen to the foreign oil groups but they are not in the driving seat.

Leave a Reply

Your email address will not be published. Required fields are marked *