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Nigeria takes it to the limit

by on September 28, 2012 2:54 pm GMT
 

The controversial
proposal, outlined in a statement by Petroleum Minister Diezani Alison-Madueke,
comes as a bitter pill for major oil companies such as Shell and ExxonMobil that
have warned “non-competitive” tax terms on offer in the bill could make
deep-water schemes unviable and may badly hit investment.

“The
proposed increase of government take to about 73% is not only competitive but
considerate when we look at the scale of other entities around the world,” the
minister contended , citing Norway, Indonesia and Angola as examples of
countries with similarly high state take – the total share of oil revenues
after all taxes and royalties.

Previous
terms introduced in 1993 were based on an oil price of $20 a barrel and are no
longer realistic due to higher prices, she was quoted by Reuters as saying.

However, oil
companies argue the fiscal terms on oil drilling in Nigeria should be
substantially better than in other regions to compensate them for the extra
risks and costs posed by piracy, kidnapping, industrial-scale oil theft and
corruption.

Both houses
of Nigeria’s parliament have finished a first reading of a new draft of the Petroleum
Industry Bill that is intended to overhaul the oil industry in Africa’s top
energy producer, opening the way for lawmakers to debate the long-awaited
legislation.

The bill,
which is meant to change everything from fiscal terms to the state oil company
Nigeria National Petroleum Corporation, has already been delayed for five years
over similar disagreements between the administration, oil majors and
lawmakers.

Billions of
dollars of investment into exploration and production is on hold until it
passes.