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Daily Trust Online

Oil majors get N2tr yearly — NNPC ...fail to raise oil production

Category: Lead stories Written by Hamisu Muhammad

The  NNPC yesterday said that International Oil Companies (IOC) are being paid $13 bn annually for years to raise production and build reserves, but that they have failed to do either, a claim the oil majors have denied.
The federal government is paying the money in order to grow the daily oil production to four million b/d and to build reserves of 40 billion barrels by 2010.
Speaking at the 13th Nigeria Oil and Gas conference in Abuja the government representative, and NNPC’s Group Executive Director, Exploration and Production Mr. Abiye Membere said Nigeria’s oil production level has been static for over 40 years at 2.4 million barrels per day average, while oil reserves still remain at 37 billion for years.
 He blamed the oil companies for the failure to increase oil production and reserve for decades despite huge government investment.
Membere  said it is not fair for oil  majors to blame government on the static nature of the Nigeria’s oil production, citing funding difficulties as reasons, adding that government has given them all the needed funding support to grow production.
“Funding is not an issue, we have done it before, we move from the traditional JVs arrangement to Production Sharing Contracts- which is a new funding mechanism.”  
“Where are we today? We have given you ways of addressing the shortfall of funds, but production still stalls.”  He added that production has not gone beyond 2.5 million average.
But Mark Ward, Chairman and Managing Director of the Exxon Mobil Companies Nigeria, disagreed, blaming government for not providing adequate funding in order to achieve the target.
Ward who is also the chairman of the Oil Producers Trade Section, an umbrella body of the oil companies in Nigeria  said: “Funding issue is what is holding Nigeria back to achieve the 40 billion reserve target and daily production growth.”
On the PIB, Membere said the fiscal regime the oil majors are complaining about is  good, robust, and competitive, adding that all what government needs is fair revenue sharing formula, for the oil companies, Nigeria and its people.
But Ward said the new Bill will send a wrong signal to investors about the country, once it tempers with the existing agreements in the industry.
He said what is expected from the new PIB is to have strong regulatory agencies that will eliminate all the bureaucracy in contracts and agreement.
Shell Managing Director Mutiu Sunmonu said although there are lots of issues on the PIB, there is room for negotiation between the IOCs and the government.
He warned that the hot debate on the Bill at the moment will undermine the current discussions between the two parties.

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