Nigerian lawmakers pass long-awaited petroleum bill

Both chambers of Nigeria's parliament have approved a long-awaited bill aimed at overhauling the country's petroleum legislation in order to attract more investment into the sector.

Nigeria's senate and house this week passed different versions of the Petroleum Industry Bill (PIB) that will have to be reconciled. The government is scrambling to get the draft legislation finalised and sent to Nigerian president Muhammadu Buhari for signature before parliament's summer recess that begins on July 16.

PIB has been in the works for two decades and first arrived in Nigeria's parliament in 2008. Since then it has been debated and rewritten many times, amid wrangling between the government and oil companies and different political factions. The speaker of Nigeria's parliament Femi Gbajabiamila hailed this week's approvals as an "important victory."

"It must be emphasised how important this day is," he said. "We have been waiting for this for almost 20 years."

"This is a significant milestone for the Nigerian petroleum industry; the bill has been nearly two decades in the making," Mansur Mohammed, from Wood Mackenzie's sub-Saharan Africa upstream research team, commented. But he cautioned that "although the bill is on the final stretch, Nigeria’s petroleum industry faces significant threats to long-term oil demand. It is, therefore, necessary for the government to move at pace to attract investors."

The oil and gas majors that Nigeria has long relied on to develop its resources are now limiting their investment in hydrocarbons as they shift towards cleaner forms of energy. In a notable example, Shell revealed in May that it was looking to sell its onshore assets in Nigeria, after struggling for years with spills caused by pipeline theft and sabotage, tarnishing its environmental reputation.

"The majors have ambitious targets towards net-zero emissions by 2050, and their investment in upstream will be high graded to the most commercially attractive projects that meet strategic goals," Mohammed continued. "Nigeria is important to their portfolios and the PIB will clarify the terms of their continued presence."

PIB could well become law this year, the analyst believes, as both houses of parliament and the executive branch want to see it enacted. Its passing will alleviate fiscal uncertainty that has deterred investment across the upstream, midstream and downstream sectors, he said.

Among the highlights of the bill are lower royalty and tax rates, and more favourable terms for marginal fields.