Nigeria risks losing $185bn within 10 years as higher taxes proposed by a new law will deter investments in the country’s oil industry, an association of energy companies including Exxon Mobil, has said.
The nation’s oil production may slump by 25 per cent from 2.4 Million barrels a day if the Petroleum Industry Bill is implemented, the Managing Director of Exxon Mobil Corporation’s Nigerian unit, Mr. Mark Ward, said in Lagos on Friday, according to a Bloomberg report.
The loss of investment caused by the law would leave it insufficient to tackle decline rates at oilfields, said Ward, representing the Oil Producers Trade Section at a conference in the commercial capital.
“The terms proposed increase royalties, increase taxes and lower allowances or incentives all at the same time,” said ward. Energy companies are “deeply concerned” as the new tax proposals will “create one of the world’s harshest fiscal regimes.”
The new law is aimed at reforming the way Nigeria’s oil and gas industry is regulated and funded, and seeks to increase the government’s share of profit from oil pumped to at least 73 per cent, from 61 per cent currently, according to Petroleum Minister, Diezani Alison-Madueke.
The Oil Producers Trade Section are Royal Dutch Shell Plc, Chevron Corporation, Exxon Mobil, Total sa and Eni SpA.
The companies pump about 90 per cent of Nigeria’s oil through ventures with the state-owned Nigerian National Petroleum Corporation. Proposed increased taxes in the legislation would make exploration “uneconomical,” they said in a joint presentation to lawmakers last month.
Information from Punch was used in this report.