Total calls for transparency in Nigerian oil reform

Nigeria needs to clarify its petroleum reform process as operators are concerned about effects on contracts, said Christophe de Margerie, chief executive of Total SA.

Uchenna Izundu
OGJ International Editor

LONDON, June 18 -- Nigeria needs to clarify its petroleum reform process as operators are concerned about effects on contracts, said Christophe de Margerie, chief executive of Total SA.

He made the comments at the inauguration of deepwater Akpo gas-condensate field off Nigeria, which is producing 175,000 b/d. His thoughts echo those from other operators like Royal Dutch Shell PLC and Chevron Corp., which have urged transparency.

“We know we need a new framework, but we also need to make sure we understand what our future is going to be…. We need to understand the rules of the game,” de Margerie said in Abuja. “We have existing contracts which are prevailing now for many years—production sharing, formal concession, etc.—so we need to clarify, to be more transparent.”

Since last August, the Nigerian National Assembly has been considering the Petroleum Bill, which will break up state-owned oil company Nigerian National Petroleum Corp. into profit-driven, autonomous units. There will also be new agencies with distinct roles. Overlapping jurisdictions and conflicting interests hamper the current regime (OGJ Online, May 6, 2009).

The legislation has taken a decade to formulate and will address NNPC’s funding gaps, domestic gas shortages, and fuel subsidies that have been costly for the government.

Total, Shell, and ExxonMobil Corp. have given multibillion-dollar loans in bridge financing to NNPC to help it meet its obligations in joint venture projects.

De Margerie said Total was committed to Nigeria despite the global economic slowdown. It is developing deepwater Usan oil field and considering development of the Egina discovery on the same block as Akpo field. It operates several fields in shallower water and, in partnership with NNPC, operates a project to increase production from onshore block OML 58 in Rivers State to 550 MMscfd from 370 MMscfd of gas and to 140,000 b/d from 15,000 b/d of oil equivalent oil and condensate.

“We are confident that further constructive engagement with the National Assembly members, the Ministry of Petroleum Resources, and stakeholders will see a pragmatic balance between all expectations,” added de Margerie.

In February, Ann Pickard, Shell’s regional executive vice-president for Africa, cautioned that Nigeria’s reforms would need to “address funding, security, eliminate uncertainties, and improve transparency.”

Nigeria's junior petroleum minister, Odein Ajumogobia, said Nigeria would try to resolve the issues raised by oil companies in the reform.

"When you are transiting from one legal regime to another, there is a transition period. I think what you are hearing…is that small period of uncertainty (as to) what the impact of the changes will be on the existing contracts," Ajumogobia said.

Contact Uchenna Izundu at uchennai@pennwell.com.

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