Nigerian plan has oil antsy about offshore investing

International energy companies working in Nigeria are worried that proposals in the country’s long-delayed oil industry law will deter investment in new offshore projects.

At least half of Nigeria’s total crude output is from offshore oilfields, helping to offset declining production from mature onshore assets. But recent discoveries have remained undeveloped in the face of regulatory and legislative uncertainty.

“Our review of the Petroleum Industry Bill shows that deepwater provisions do not provide a favorable environment for future investments and for the launching of new projects,” Mike Sangster, managing director of Total SE’s Nigeria unit, told lawmakers at a hearing in Abuja, the capital.

To boost new investment, the proposed law should grant deepwater oil projects full royalty relief for the first five years of production or a graduated royalty program, said Sangster, speaking on behalf of the Oil Producers Trade Section, a group of 30 producers including Total, Royal Dutch Shell Plc, Exxon Mobil Corp., Chevron Corp. and Eni SpA, which he chairs.

The bill — legislation that’s two decades in the making — will streamline how Nigeria’s energy assets are operated and funded. First presented in parliament in 2008, progress in passing the bill was held up by political wrangling and objections from international oil companies that say the government is demanding an excessive increase in revenues.

Nigeria, Africa’s top oil producer, is facing growing competition for new investments. Nigeria was able to attract only $3 billion, or 4 percent, out of the $70 billion spent on new projects in Africa between 2015 and 2019, Sangster said.

The producers also worry the proposals don’t explicitly preserve the terms of existing oil investments.