• 4 minutes Is $60/Bbl WTI still considered a break even for Shale Oil
  • 7 minutes Oil Price Editorial: Beware Of Saudi Oil Tanker Sabotage Stories
  • 11 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 15 minutes Wonders of Shale- Gas,bringing investments and jobs to the US
  • 8 hours Adsorbent natural gas tanks are revolutionary.
  • 2 hours Visualizing How Much Oil Is In An Electric Vehicle (Hint: a heckuva lot)
  • 7 hours Apartheid Is Still There: Post-apartheid South Africa Is World’s Most Unequal Country
  • 8 hours Evil Awakens: Fascist Symbols And Rhetoric On Rise In Italian EU Vote
  • 36 mins Total nonsense in climate debate
  • 10 hours IMO2020 To scrub or not to scrub
  • 4 hours Theresa May to Step Down
  • 23 hours Look at the LONGER TERM bigger picture of international oil & gas. Ignore temporary hiccups.
  • 16 hours IMO 2020 could create fierce competition for scarce water resources
  • 1 day Apple Boycott in China
  • 1 day IRAN makes threats, rattles sabre . . . . U.S. makes threats, rattles sabre . . . . IRAQ steps up and plays the mediator. THIS ALLOWS BOTH SIDES TO "SAVE FACE". Then serious negotiations start.
  • 1 day Australian Voters Reject 'Climate Change' Politicians
  • 4 hours BBC: Proposal to spend 25% of EU budget on climate change
  • 1 min Some Good News on Climate Change Maybe
Jen Alic

Jen Alic

 

More Info

Trending Discussions

Nigeria's Oil Shifts to Smaller Players

After five years of stalled negotiations, a bill overhauling Nigeria’s oil industry has finally won cabinet approval and if it makes it beyond the president’s office and through parliament, it would ideally lead to a rejuvenation of crude oil production in the country by releasing billions in investment.

Nigeria’s oil officials say the Petroleum Industry Bill (PIB) will revolutionize the industry, partly privatizing the state oil company and tax levy 20% taxes on deep-water offshore oil profits and 50% taxes on shallow-water offshore and inland oil profits.

Under the PIB, the Nigerian National Petroleum Corporation (NNPC) would be deconstructed and replaced with an independent National Oil Company, partly privatized, listed and handed control of key oil infrastructure currently (mis)managed by the government. However, the details of this aspect remain vague and we can expect a serious amount of jockeying over exactly what will be handed over to the new National Oil Company, whose NNPC-era management has already been replaced.

The country’s oil minister, currently Alison-Madeuke, would be given a very powerful supervisory role over every aspect of the country’s oil production, hence the Ministry’s opinion that the bill is revolutionary.

The latest draft of the PIB (and there have been many) is possibly more attractive to the multinational oil companies than its predecessors, and this time it appears to have the president’s support. But it should also be noted that President Goodluck Jonathan’s track record on fighting corruption is abysmal at best.

According industry analysts, some $40 billion in exploration and production investments has been halted while the government debated the nature of the PIB for the past five years. Local industry players, however, say these five years have bought them enough time to latch on to lucrative oil deals and choice exploration blocks that would otherwise have gone to the multinationals.

The end result of the five years of stalling over the law is that crude production has declined and multinationals, like Royal Dutch Shell, are losing interest in Nigeria and setting their sights elsewhere. So we are seeing now a shift in the Nigerian oil industry away from larger international companies to smaller, local companies who partner with smaller multinationals.

The smaller companies so far seem to be optimistic about the new PIB, should it actually gain passage, and because of a trend toward local bank consolidations over the past years, they also have greater access to capital to fund their projects.

ConocoPhillips, for instance, is reportedly seeking to offload its Nigeria operations, and the trend for now seems to be for the larger companies to sell off their onshore operations in order to finance off-shore expansion. Off-shore is less risky only in terms of the Niger Delta militancy, and the regulations are easier to bend. 

It is possible that this shift will usher in a new security paradigm in the Niger Delta, for better or worse. With the off-shore push of larger international companies who have largely destroyed the country’s environment and fostered a large-scale oil insurgency while doing nothing to contribute to community’s who could benefit from Nigeria’s crude oil production, smaller oil companies with local elements stand a better chance of quelling the Niger Delta militancy. In the least, this situation stands to turn more Niger Delta enemies into stakeholders.

Of course, in the immediate- near term, this will result in a transformation (rather than a cessation) of violence as local players fight for greater control of production and a greater share in the profits. Corruption is too deep, but will be spread out more thinly.

As for the offshore ventures of the international companies, it will certainly provide greater impetus to piracy on the high seas.

By. Jen Alic of Oilprice.com

Jen Alic is a geopolitical analyst, co-founder of ISA Intel in Sarajevo and Tel Aviv, and the former editor-in-chief of ISN Security Watch in Zurich.




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News