“Unthinkable”: Shell goes on the offensive, rubbishes Petroleum Industry Bill

by Stanley Azuakola

Mutiu Sunmonu, the Country Chair of Shell Companies in Nigeria, has been very silent on what the company thinks about the Petroleum Industry Bill, even though lobbying efforts by the company have always gone on behind the scenes until now.

Sunmonu finally broke his silence however on Friday and this is what he thinks — The draft Petroleum Industry Bill (PIB) before the National Assembly is lopsided and will frustrate current investments in Nigeria’s oil and gas industry and impede on the ability to meet set targets on power generation.

His position, even though unexpected, considering that businessmen would always want the best deal for their companies, contradicts widely held belief that the PIB as presently drafted favours the international oil companies, IOCs, at the expense of the country.

Sunmonu, made the declaration in Lagos at the Nigerian Extractive Industry Transparency Initiative, NEITI, PIB Stakeholders Forum. He said: “As it stands right now, the PIB will render all deepwater projects and all dry gas projects— whether for domestic or export markets— non-viable.

“The opportunities I have just outlined will be lost. And the opportunity to monetise some of the world’s best gas reserves will be lost. The opportunities to kick-start the power sector— the key to economic growth— using easily accessible gas will also be lost.

“If the PIB does not encourage the development of the domestic gas market, none of this will happen and the consequences are almost unthinkable,” he said.

On the fiscal provisions of the PIB, Sunmonu argued that “the PIB needs to address long term industry issues; for example, funding issues for Joint Ventures, JVs, where funding requirements have constrained production growth.”

During his speech which was tagged ‘Investors Perspective on the PIB,’ Sunmonu noted that it wasn’t enough to desire having a strong national oil company, but one that can compete favourably.

He said: “Any national oil company has to partner positively and, again, has to compete with those elsewhere that are also seeking external investment. NNPC has got to be able to fund its share of JV costs if it is going to attract such external investment and partnership.”

According to reports,

He recalled that the industry for many years had suffered huge losses on account of militancy and restiveness in the Niger Delta, which operators have not recovered from and should be taken into consideration.

The Shell boss further maintained that in spite of the issues generated by the PIB, what is required by the industry players is a bill that will “create a level playing field— one that is fair to all investors— big, small, new or old.”

He said the bill should also provide “sufficient incentives for new investment to fuel growth,” adding that “it is important to take local business challenges in Nigeria into consideration as well as the impact on existing investments made in good faith at current legal and fiscal terms.”

Against this background, Sunmonu insisted, “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.

“What we have seen and what we know of the current draft PIB requires significant improvement to secure Nigeria’s competitiveness, and attract the required level of investment to enable exploration to increase Nigeria’s reserves and then foster development of the projects to monetize them.”

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