French oil major, Total has stated that the proposed Petroleum Industry Bill (PIB) should not change the terms of the existing contracts in the oil and gas sector and should also boost investments in the sector.
The Managing Director of Total Upstream Companies in Nigeria, Mrs. Elisabeth Proust told THISDAY that the PIB should not change the current fiscal terms on existing contracts, adding that only a sustained investment and boost in production would increase government revenues.
“There was a South American country that suddenly made big changes to existing fiscal terms and conditions. Many International Oil Companies (IOCs) left the country. Total is still working in that country but at a very low level and we have been unable do any new project in that country because of the change in its fiscal policies. Government revenues dropped dramatically and the government is now reviewing their current policies to bring back investments. We sincerely hope that it is not going to be the case in Nigeria,” she said.
She said the PIB should provide stable fiscal conditions that would promote investment and reduce bureaucracy.
Proust pointed out that the duration for getting approvals for oil and gas projects in Nigeria is the longest globally with the complexity of the number of agencies the oil companies have to face.
“This is one of the areas we expected that the PIB will address. The other is on gas terms. The PIB should address both fiscal and non-fiscal policy that will accelerate the development of Gas. And this is our expectation of the PIB.
She further stated that the provisions of the draft PIB is a big worry for Total as the company had started deep offshore projects on the economics of existing terms and condition of its production sharing contracts (PSCs) signed with the Nigerian National Petroleum Corporation (NNPC).
According to her, the company took the risk in accordance with the terms of the PSCs, which “many people don’t realise meant that we make all the investment with the government paying nothing”.
“If we didn’t find oil, then we lost everything without compensation or any recovery from the government. We took the risk but on the other hand when you take a risk you want your reward and the real reward is to be able to maintain our investment in Nigeria and our commensurate returns in line with the contracts,” she explained.
She identified some of the joint venture projects to include Ofon 2 and OML58, which she said the company was very close to concluding their developments.
Proust also said that for Egina, which is a deepwater PSC project, the company is at relatively early stages and would continue based on the actual fiscal and PSC terms that were originally agreed.
“On other projects I want to say that Usan is my baby. I was involved in Usan right from when I was in charge of project architecture and engineering for E&P at Total Head Quarters and I was happy that Usan was on-stream by the time I came to Nigeria as Managing Director,” she said..
Proust disclosed that the company had discovered more fields like Ikike, Ubeta, adding that it is also conducting appraisal oil well on the deep offshore.
[This Day] [Photo: Strategy Business Group]