Despite increasing production from emerging oil producing countries around the continent, Nigeria still produces over half of sub-Saharan Africa's total oil, the Managing Director of Shell Petroleum Development Company (SPDC), Mr Mutiu Sunmonu, said. Sunmonu stated this at the Nigeria Oil and Gas (NOG) 2013 Conference which ended in Abuja at the weekend.
Shell boss explained that for Nigeria to maintain competitive edge, a conducive operating environment and fiscal terms leading to competitive and attractive rates of return must be in place.
"Nigeria cannot afford to miss the boat. There is a finite amount of money to be invested by oil and gas majors in the short to medium term, and Nigeria needs a slice of that cake. We are already at an advantage, but how do we continue to maintain this competitive edge?" he queried.
According to him, Nigeria is a challenging business environment because costs are at the high end of the global scale while contracting and licensing can be long and tortuous process with multitude of security related problems onshore that have to be dealt with on a daily basis.
Though Sunmonu acknowledged the Federal Government's efforts at addressing the challenges, he noted that there is still a lot more that must be done, stressing that in recent past, militancy has simply been replaced by industrial scale oil theft and sabotage.
"As a result of this unfortunate development, we and others have had to shut-in significant production, spend huge amounts on replacing and repairing hardware and also deploying massive resources to clean up oil spills," he lamented.
On fiscal terms, he said a balanced Petroleum Industry Bill (PIB) is required, especially the one that will provide optimal revenue to the government whilst providing sufficient incentives for new investments to fuel growth.
"The PIB should create a level playing field; one that is fair to all investors-big, small, new or old," he canvassed.
Besides, he said the legislation on the PIB would need to address long term industry issues, such as funding of the Joint Ventures, especially in situations where funding requirements have constrained production growth, stating thatNigeria needs a strong national oil company that will partner positively and must be ready to compete with those elsewhere.
He advised that it was equally important to take local business challenges in Nigeria into consideration as well as the impact on existing investments made in good faith at current legal and fiscal terms.
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