Speaking after the Petroleum Industry Bill (PIB) was passed by the Nigerian National Assembly on 1 July, Mansur Mohammed, head of West Africa content on Wood Mackenzie’s sub-Saharan Africa upstream research team, said: “The Senate and House each passed different versions of the bill, which will now require reconciliation before it is sent to the president for assent into law. So there is still outstanding work to do before the PIB becomes law, but we see momentum behind the bill.”
He added: “This is a significant milestone for the Nigerian petroleum industry; the bill has been nearly two decades in the making.”
The PIB aims to reposition Nigeria's petroleum sector as an attractive investment destination as the energy transition intensifies competition for capital.
Mohammed said: “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 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. Nigeria is important to their portfolios and the PIB will clarify the terms of their continued presence.”
He added that timing is of the essence. The National Assembly breaks for summer vacation in mid-July to resume session in early September. As such, there is time to work out outstanding issues before year-end.
“This year might, after all, be the year that the PIB becomes law as there is political alignment between the Houses of Parliament and the executive to enact the new petroleum law,” Mohammed said.
If passed, the fiscal uncertainty deterring investment across upstream, gas, midstream and downstream will be alleviated.
The latest version of the bill offers incentives and concessions made to assuage stakeholder concerns. Lower royalty and tax rates are proposed. Marginal fields and indigenous producers are expected to benefit more from favourable terms.
The impact of the fiscal terms will need to be fully assessed before investors can take decisions, and the degree of change will be dependent on terrain and the type of project.