Despite the widely-held view that the new draft Petroleum Industry Bill (PIB) has addressed all the contentious areas that stalled the passage of the previous bill, the Managing Director of Shell Petroleum Development Company (SPDC) and Chairman of Shell Companies in Nigeria, Mr. Mutiu Sunmonu, has said the new bill is not fair to investors.
Speaking recently in Lagos on "Investors' Perspective on the PIB," during stakeholders' engagement on the bill, organised by the Nigeria Extractive Industries Transparency Initiative (NEITI), Sunmonu said the current PIB had highlighted the differences of views between industry and government, stressing that there were still gaps to close.
He stated that it was important for the bill to take local business challenges in Nigeria into consideration and the impact on existing investments made in good faith at current legal and fiscal terms.
According to him, the PIB should create a level-playing field - "one that is fair to all investors - big, small, new or old".
"What we have seen of the draft PIB to date does not indicate a bill that fits these criteria. And this is the opinion not only of the major players in Nigeria's oil and gas industry, but, as I mentioned earlier, industry analysts as well," he said.
Sunmonu stated that what the oil industry requires is a balanced bill that will provide optimal revenue to the government and sufficient incentives for new investment to fuel growth.
He identified lower exploration activity and very few final investment decisions - meaning fewer reserves and reduced investments, as the consequences of the current fiscal and legal uncertainty in the country.
He noted that oil and gas production was not being replenished and that there was a serious threat of a significant reduction in production in the medium term with all of the consequences for revenue generation for the country.
Sunmonu stated that the oil industry needed to work with government to find a win-win solution.
"Dialogue is on-going and with the right level of cooperation, industry and government will obtain better insight that will lead to a resolution of the differences," he said.
"In the last few weeks the industry-government dynamics have been encouraging. There has been an increased willingness to share data and assumptions and this has opened up greater opportunities for mutual understanding and progress. We need to continue this dialogue - indeed build on it - but time is of the essence. The outside world is watching and waiting. Analysts are commenting - Woodmac has just published its assessment of the current state of play, and it is not flattering. The media is portraying this as industry versus government - which, frankly, doesn't help - and the clock is ticking," he added.
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