Following concerns raised by international oil companies (IOCs) operating offshore on the proposed fiscal regime as contained in the Petroleum Industry Bill (PIB), the Federal Government is considering a review of the proposed changes.
Also, French oil giant, Total, announced Monday that it had finalised negotiations to sell a 20-per-cent stake in its Usan oil field (Oil Mining Lease 138) to Chinese oil giant, Sinopec, for $2.5 billion.
Since the PIB was sent to the National Assembly by the executive, oil companies have repeatedly warned that the fiscal terms could deter investment in the industry and cost hundreds of thousands of jobs.
The new terms are part of a long-delayed legislation intended to transform the oil sector in Africa's largest crude producer after decades of mismanagement and corruption.
Signs of willingness by the government to review a planned hike in royalties come at a critical moment, since the legislation is awaiting final approval from lawmakers and should be passed within "two to three months", according to Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke.
But the legislation has still to overcome domestic political opposition as well as lobbying from the oil industry and similar timelines have not been met in the past.
In an interview with the London-based Financial Times, Alison-Madueke said the new fiscal terms were "equitable", and would only increase the government's total take from 7 to 8 per cent.
But she added that there was "room for compromise" on a planned hike in royalties for production sharing contracts offshore, and that talks with multinational companies such as Shell, Chevron, ExxonMobil, Total and Eni were continuing.
"They still feel we are too far apart," said Alison-Madueke. "We would like to feel that at the end of the day we have some fairly median point."
Uncertainty over the PIB has caused stagnation in the oil industry, with little spending on exploration in recent years. Production is stuck at around 2.4 million barrels a day, barely half what was targeted a decade ago.
If passed, the legislation will see the Nigerian National Petroleum Corporation (NNPC) stripped of regulatory powers and split into three companies, including a listed oil company run along commercial lines.
The downstream oil sector, which has seen billions of dollars stolen through collusion between fuel marketers and corrupt officials will be deregulated and liberalised.
However, the IOCs have profited in the past from opaque rules and lax controls, and in many cases have failed to adhere to international standards on environment protection.
But rising insecurity and oil theft in the Niger Delta have led the multinationals to focus more on deepwater projects, which unlike onshore joint venture operations are governed by production sharing contracts with better terms.
Alison-Madueke said the proposed changes were still less onerous than in countries such as Angola and Indonesia.
But in a presentation to diplomats, civil society groups and government officials in Abuja last week, oil company officials warned that if the bill was not amended, 470,000 jobs and up to $100 billion in investment could be lost by 2020. There would be no investment in new deepwater projects.
Alison-Madueke disagreed with the prognosis, but said it was difficult to say that the oil companies "are being totally alarmist".
She said that she expected the existing foreign operators in Nigeria to remain the government's partners for years to come but that if they prove reluctant to invest under the new legislation it could open the door for Chinese and other emerging power oil companies to "roll on in".
"We have a lot more competition in the sub-Saharan region than we had before, when we were pretty much the sole explorer and producing nation.
"For that fact alone and also to keep the discourse going, we are still in discussion (with the oil companies," she said.
A former Shell employee, Alison-Madueke is a controversial figure in Nigeria. She is accused by opponents of running the oil ministry like a personal fiefdom. But she is fierce in her own defence.
"If you are determined to move reforms, you will be seen as a controversial figure, whether you like it or not," she said, adding that her decision to suspend dozens of fuel marketing companies last November because of suspicions of fraud had led to "vilification, abuse and threats to my life".
Also, Total announced Monday that it had finalised talks to sell 20 per cent in OML 138 to a wholly owned subsidiary of China Petrochemical Corporation (Sinopec), for approximately $2.5 billion.
The oil block, which currently produces 130,000 barrels per day of oil equivalent, contains the Usan field, which started production in February 2012.
The French oil company, according to Reuters, in September announced plans to sell assets valued at between $15 billion and $20 billion in the period up to 2014 as part of a bolder approach to managing its business, which has seen it buy and sell assets more frequently.
Total, which is also selling its French gas network business, is ramping up spending on exploration to take advantage of the historically high price of oil, which averaged $113.6 a barrel in the first half of 2012.
"This sale of an asset operated from a minority position will allow us to focus our resources on the material growth opportunities in Total's portfolio" President Upstream at Total, Yves-Louis Darricarrère said.
NNPC is the concession holder of OML 138. Other partners include Chevron Petroleum Nigeria Ltd. (30 per cent), Esso E&P Nigeria (Offshore East) Ltd. (30 per cent) and Nexen Petroleum Nigeria Ltd. (20 per cent).
The Usan field is Total's second major deepwater development in Nigeria after Akpo. The field, located 100 kilometres south-east of Port Harcourt in a water depth of 700-850 metres, is estimated to contain 537 million barrels of recoverable reserves via 42 wells and an extensive subsea infrastructure.
It also has a stand-alone FPSO production with a capacity of 180, 000 barrels per day.