The federal government won't award new oil exploration licenses until lawmakers pass a reform bill now being considered, Director, Department of Petroleum Resources, Mr Osten Olorunsola, said.
"You need firm commitment and firm predictability of the law," he said in a February 21 interview in Abuja, the capital. "We have to wait for the bill to be passed."
The Petroleum Industry Bill, first sent to the National Assembly in 2008, didn't become law during the tenure of a previous legislature and was reintroduced by President Goodluck Jonathan in July. Fiscal provisions in the bill seek to raise Nigeria's share of revenue to 73 percent from 61 percent, Petroleum Minister Diezani Alison-Madueke said on Sept. 28.
Royal Dutch Shell Plc; Exxon Mobil Corp; Chevron Corp; Total SA; and Eni SpA (ENI), run joint ventures with the state-owned Nigerian National Petroleum Corp, NNPC that pump more than 90 percent of the country's oil. The West African nation last held an oil licensing round in 2007.
"The major concern is that oil production has remained virtually stationary over the past few years due to the lack of investment in the sector which partially reflects the uncertainty surrounding," the bill, Samir Gadio, a London-based emerging-markets strategist at Standard Bank Plc, said in an e- mailed reply to questions today (yesterday).
Companies including Shell and Exxon Mobil have criticized the fiscal terms as likely to make investment in offshore oilfields unprofitable. Most have held back on funding more exploration while Shell and ConocoPhillips have sold some of their onshore assets to Nigerian companies.
Bonny Light Crude, Nigeria's top export grade, gained 0.1 percent to $115.35 by 11:19 a.m. in London, the lowest since February 21. Oil exports account for more than 90 percent of the country's export earnings and about 80 percent of government revenue, according to the Petroleum Ministry.
While the major energy companies have "toned down their investments" and shunned exploration because of uncertainty about the new law, smaller producers are increasing drilling activities as they seek to boost output, Olorunsola said.
Companies including London-based Heritage Oil Plc, and Lagos-based Neconde Energy Ltd. bought stakes in Nigerian oilfields jointly owned by Shell, Total and Eni. Oando Plc, a Nigerian energy company, purchased the local unit of ConocoPhillips.
"A lot of that is coming from all these indigenous companies that are buying assets from Shell as well as some success from some marginal field holders," Olorunsola said, referring to areas producing volumes of crude too low to be profitable for bigger companies. "We had about 10 rigs, much more in comparable terms and timing in 2012. And that just shows the success of all these divestments."
Forty-seven oil rigs were operating in the country's Niger River delta region in the fourth quarter compared with 37 a year earlier, according to the Department of Petroleum Resources.
Nigeria's crude oil reserves were down 1.9 percent to 36.5 billion barrels in 2012 from 37.2 billion barrels a year earlier. Average daily oil and condensate output stands at 2.6 million barrels, according to the regulator.