Nigeria: Proposed Oil Legislation Unacceptable to Key Players

At a senate hearing on the bill, executives of  Chevron Corp. and Exxon Mobil Corp., Eni SpA, as well as Shell PLC said the bill would cost the firms billions of dollars and drastically diminish foreign investment in Nigeria's oil industry.  Government officials didn't respond to requests to comment on the hearing.

Nigeria's export revenue comes almost entirely from oil. The bill is the centerpiece of changes initiated by President Umaru Yar'Adua after his election in 2007. It is intended to revitalize an industry that has seen production of more than one million barrels a day of oil shut down amid attacks on pipelines, deteriorating infrastructure and mounting bureaucratic hurdles.

The bill, which has been in the works for almost a decade, still isn't in its final draft. However, the fundamental changes it proposes include imposing higher royalties for every barrel of oil produced as well as higher tax rates on companies operating in Nigeria. The bill also would allow the government to renegotiate existing deep-water contracts and repossess unexplored fields already contracted to companies.

Oil company officials say for months they tried to discuss concerns about the bill with government officials, but were granted only ceremonial meetings that yielded no substantive discussions.

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Editors Note:  Billions of dollars in oil revenue have been squandered through corruption each decade since the 70’s. This corruption in turn has maintained weak  infrastructure and low confidence in the political and administration system. Most if not all the militant attacks and unrest can be linked back to corrupt administration or inaction. At a time when Nigeria requires  investment and support in the domestic oil industry, it is appropriate that the key oil companies should seek genuine dialogue and review on the porposed bill.