Nigeria’s plans for overhauling its oil and gas industry are not going over so well with, well, the oil and gas industry. At a public hearing Tuesday, officials from numerous international oil companies (including Chevron, Exxon Mobil, Eni SpA, and Royal Dutch Shell) voiced unanimous disapproval of a bill intended to revitalize the nation’s oil industry.
Nigeria’s oil industry is struggling; it has suffered from attacks on pipelines, deteriorating infrastructure, and growing bureaucratic obstacles, the Wall Street Journal reports. The industry has, accordingly, halted production of more than one million barrels of oil a day. This is an urgent problem, since oil exports comprise nearly 100 percent of Nigeria’s export revenue.
The bill, initiated in 2007 by Nigeria’s president and still in-progress, includes several fundamental changes. It would allow the government to charge higher royalties for every oil barrel produced, impose higher tax rates for companies operating in Nigeria, renegotiate existing deep-water contracts, and reclaim unexplored fields (even those already contracted to companies).
Oil firms object to the bill because the changes it would impose would cost them billions of dollars. They also believe it would drastically decrease investment in Nigeria’s oil industry by foreign firms. The bill isn’t yet in its final iteration, and oil companies are attempting to influence its final form. Some of the oil companies claim their input has not been “heard” in the tweaking-of-the-bill process.
The effect of implementing legislation oil firms disapprove of on those firms is clear. But what effect would it have on Nigeria? This is to be determined….