Nigerian oil bill draws investors

A new oil bill will cater to foreign investment from emerging markets.

As Nigeria's government prepares to carry out the Petroleum Industry Bill (PIB) that will give investors "long-term" investment prospects, the country, which is Africa's largest oil producer, should look into more cooperation in the oil and gas industry with emerging markets including China and India, according to a senior government official.

All oil-producing countries, particularly those in Sub-Saharan Africa, will have to "re-assess their balance of their exports in oil and gas and should find more emerging export destinations", Deziani Alison-Madueke, Nigerian Minister of Petroleum Resources, told China Daily after the recent World in 2014 Summit in New York.

"China is already very much involved in the Nigeria oil and gas sector as it is in a number of other sectors in our economy, (so) what we expect to see over the next five years with the emergence of the Petroleum Industry Bill is that the scale of Chinese investment - which has been quite good - would increase rapidly," she said.

"China is one of the destinations that we are working with very stringently in terms of exports", said the minister, adding that Chinese investors should look to "up the ante" in Nigeria's oil and gas industry.

Chinese oil and gas companies such as China National Offshore Oil Corporation and China National Petroleum Corp all have investment in Nigeria.

The proposed bill, which might make the country's oil output fall over 500,000 barrels a day, aims to increase Nigeria's share of profits of oil from its own shores. The bill - which carries higher taxes - proposes to boost the government's share of revenue to at least 73 percent, from the current 61 percent, according to Alison-Madueke.

"The bill will ensure more transparency and accountability and will ensure that investors have much more of a long-term handle on their investment prospects," said the minister. She also noted that the bill will help boost investment.

Chinese investment in Nigeria totaled $15.6 billion (the highest in sub-Saharan Africa) in 2012, according to the Washington-based Heritage Foundation. Most of Chinese investment was in the technology, transport, real estate and energy sectors, with 53 percent in energy-related projects.

Last June Nigerian President Goodluck Jonathan visited Beijing and met with Chinese President Xi Jinping, striking a deal that involved China agreeing to support Nigeria with a $1.1 billion low-interest loan to help build its infrastructure.

Last September Nigeria signed a deal with Chinese companies to build a $1.3 billion power plant, helping to end chronic electricity shortages. The largest oil producer in Africa still produces only a few hours of electricity a day, which affects its growth.

Alison-Madueke calls deals like these "critical partnerships".

"Nigeria-China relations, from the economic point of view, have been steadily progressing over the last five, ten years or so," said the minister, adding that it is a good "benchmark" from which the two countries have the unique opportunity to move more rapidly in terms of partnerships and investments in the oil and gas industry.

"In terms of our economic partnerships, we've handled them quite well with equity and balance on both sides," she added.

As the new bill reforms Nigeria's oil and gas industry, the minister said more opportunities will be presented for Chinese investors, such as in the downstream sector (refining of petroleum crude oil) and setting up different plants including fertilizer, methanol and petrochemical which could help Nigeria convert some of its natural gas reserves into high-value products such as plastics.

'The scope of opportunities for Chinese investors in the Nigeria oil and gas industry is numerous at this point in time," said Alison-Madueke.

yuweizhang@chinadailyusa.com