Why oil majors want PIB dead - Investigation

INDICATIONS have emerged in Abuja that major players in the oil sector, the multi-national oil companies, have kicked off a bid to ensure that the new Petroleum Industry Bill (PIB) currently being considered by the National Assembly does not see the light of day.
Sources close to the legislature and the administration told the Nigerian Tribune in Abuja, at the weekend, that the multinational oil companies were deploying different arsenals to get the bill killed.
The source said apart from lobbying members of the National Assembly, the oil majors had also been whipping up sentiment against the government, claiming that the proposal, as contained in the PIB, would force many companies to divest from Nigeria.
According to the source, what the government did with the new PIB was to ensure that the nation started deriving full benefits for its natural resource, as opposed to a situation where foreign oil companies carted away the benefits.
The source said “whereas the Joint Venture Contracts are beneficial to Nigeria, the new PIB will only highlight royalties, which will ensure that Nigeria derives maximum benefit from the product per barrel in line with the dictates in the industry across the world.”
Nigerian Tribune was also told that the time had come for Nigeria to resist the old tune, where multinationals easily threatened to pull out of the economy at the slightest bid by Nigeria to adopt international standards in the oil sector.
“With the absence of an enabling law that sets out guidelines for operations in the oil and gas sector, the Nigerian government has continued to lose billions of dollars in tax due and an unfavourable Production Sharing Contract (PSC) terms which were approved in 1993, but which are no longer valid for current economic and business realities,” the source said.
Sources also stated that the new PIB was meant to block the loopholes being exploited by the International Oil Companies (IOCs) to deny Nigeria of huge royalties.
A source said once Nigerian experts were able to recognise identified revenue loopholes, they then decided to draw up a bill which would ensure that the Federal Government gets between 86 and 87 per cent of revenue per barrel from PSC blocks, adding that whereas the 1993 agreement indicates that government would earn more if crude prices go above $20 per barrel, government has never activated the clause.
A source added that the PCS  is designed in a way that favours IOCs and that while the government takes 30 per cent of the profit, the IOCs take 70 per cent, especially in the first five years when huge capital is invested.
“Under the PSC arrangement which produces 900,000 barrels per annum, it was gathered that the government is entitled to 180,000 barrels while the IOCs take 720,000 barrels,” the source said.
The source stated: “For instance, at the current production level of 2.4 million barrels per day (mbpd) of crude oil, the PSC fields are generating $7.8 billion annually from daily production of 900,000bpd compared with the contribution of $32 billion by the Joint Ventire(JV) fields for 1.5mbpd. Under the current 1993 PSC terms, the Federal Government is only receiving about 15 per cent representing 180,000bpd from the production of 900,000bpd while the IOCs take 720,000bpd. This is what the PIB intend to correct.”
 According to one of the sources, the Nigerian lawmaker has a duty at this time to either provide for the rainy day and secure the oil industry for Nigeria’s future generation or listen to the foreign oil majors and mortgage the interest of Nigeria.
The source also allayed the fears that the oil majors might divest from Nigeria in the wake of the passage of the PIB adding that the Oil Majors are only divesting from Joint Venture operations in favour of PSC because the latter gives them  bigger profit margin.
“Right now, the IOCs are battling for the attention of Nigerian lawmakers with a view to ensuring that their interests are taken into consideration in the passage of the bill, but I can assure you that the Nigerian government has taken into consideration the international best practices before arriving at the bus stops in the compilation of the bill,” the source said.
Already, the government is said to be aware of lobbying already flagged off by the IOCs against the new bill. A source said that the government has also scheduled a number of experts to explain the details of the bill to the lawmakers while also providing data to justify the huge loss the nation had suffered through the non passage of the bill.