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Presence of 1967 Petroleum Act, non-passage of PIB frustrating investment drive of IOCs

More experts have given reasons for the observed drop in strategic investment by International Oil Companies (IOCs) in the last five years.

The Chairman and Chief Executive Officer of International Energy Services Limited, Dr. Diran Fawibe, in an interview said “A serious-minded country should not spend upwards of eight years to 10 years to enact a law that will govern the most money spinning industry it has”.

He said “We have Petroleum Law enacted in 1969 in form of a decree. But anybody knows that when you have this kind of legislation, it may be out of tune with the realities on the ground”.

“In the wisdom of the government, you want to amend this, introduce some new provisions, especially on the issue of transparency and accountability but it has taken us almost a decade to do this. So, the companies cannot make investment in an environment of uncertainty and we should put ourselves in the shoes of these IOCs.

Continuing, he said “Even if you are going to come up with some harsh provisions, do whatever you want to do and let everybody know where you are going. But the state of uncertainty that has prevailed in the industry over time is not good for us and this has been analysed, emphasised and overemphasised over time. There is absolutely no doubt about it that the non-passage of the PIB has dampened the enthusiasm of companies in doing major investments.

Explaining why upon the deadly attacks on oil installations in the Niger Detla at the heat of militancy, IOCs still stayed, Fawibe said “You don’t expect the oil companies to walk away just like that; they will still maintain their presence. Even their home government will not even want them to leave”.

“The state of energy security is tied to availability of oil. Yes, today, we may say that Nigerian oil is not going to the US as it used to in the past, but even the US cannot write off any particular country that can supply oil to them. Now, China and India that we did not supply oil to in the past have seen their economies develop to a point where they are consuming a lot of oil and that is why our oil is now going there. So, energy security is important to the economy of the world.

“The companies have invested heavily in this country. Shell has been operating effectively since 1957; they discovered oil in 1956, started development in 1957 and started export in 1958”.

“Chevron used to be Gulf; it started production, I think, in 1967. So, it is not the kind of asset development you can just walk away from. The only thing you can do is to maintain the existing assets but put less into new activities.

He added that currently, many of them are concentrating now on deepwater where they expect militancy not to be able to affect. But then they have the uncertainty of the PIB because it dwells substantially on the deepwater.