The Nigerian parliament on July 1 passed the Petroleum Industry Bill (PIB), which could radically overhaul the country's oil and gas sector, providing some much-needed reforms to Africa's largest oil producer.
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Lawmakers in both the upper legislative chamber Senate and the lower chamber House of Representatives, voted for the passage of the PIB, more than a decade after it was first introduced.
The bill will now be sent to President Muhammadu Buhari for his assent for the legislation to become a law.
"The Senate expects President Buhari to sign the bill as soon as it is transmitted...the bill got the input of both the executive and legislative arms of government," Senate president Ahmed Lawal, said.
The bill seeks to introduce changes to the governance, administrative, regulatory, and fiscal framework of the Nigerian oil and gas industry, in order to ensure transparency, strengthen the governing institutions, and attract investment capital, among other objectives.
Long time coming
Lauded as the biggest shake-up in Nigeria's dysfunctional oil industry for decades, the PIB had been stuck in parliament, held up by political wrangling and objections by foreign oil companies, which argued that the significantly higher fiscal terms envisaged in recent PIB drafts are unacceptable.
This development could inject some much-needed enthusiasm in the country's oil and gas sector, according to market sources.
Africa's largest oil producer had pinned its hope on the PIB to attract the much-needed investment to bolster its oil exploration and production, and increase reserves and output to 40 billion barrels and 3 million b/d, respectively.
The lack of upstream investment in Nigeria has contributed to a steady fall in its oil production over the past decade.
The country has the capacity to produce around 2.2 million-2.3 million b/d of crude and condensate, but production has averaged around 1.64 million b/d so far in 2021, according to S&P Global Platts estimates.
Urgent need of investment
Industry sources said Nigeria is also hoping the legislation will breathe new life into its downstream sector that could use some private investments.
Oil producers, particularly Nigeria's foreign partners including Shell, ExxonMobil, Chevron, Eni and Total, have said billions of dollars in investments in the Nigerian oil industry was held up due to the non-passage of the PIB.
Nigeria's upstream sector has not seen much activity in the past half a decade, which industry analysts blamed on the continued uncertainty due to the non-passage of the energy bill.