Skip Navigation Links.
Collapse <span class="m110 colortj mt20 fontw700">Volume 12 (2024)</span>Volume 12 (2024)
Issue 2, Volume 12, 2024
Issue 1, Volume 12, 2024
Collapse <span class="m110 colortj mt20 fontw700">Volume 11 (2023)</span>Volume 11 (2023)
Issue 6, Volume 11, 2023
Issue 5, Volume 11, 2023
Issue 4, Volume 11, 2023
Issue 3, Volume 11, 2023
Issue 2, Volume 11, 2023
Issue 1, Volume 11, 2023
Collapse <span class="m110 colortj mt20 fontw700">Volume 10 (2022)</span>Volume 10 (2022)
Issue 4, Volume 10, 2022
Issue 3, Volume 10, 2022
Issue 2, Volume 10, 2022
Issue 1, Volume 10, 2022
Collapse <span class="m110 colortj mt20 fontw700">Volume 9 (2021)</span>Volume 9 (2021)
Issue 4, Volume 9, 2021
Issue 3, Volume 9, 2021
Issue 2, Volume 9, 2021
Issue 1, Volume 9, 2021
Collapse <span class="m110 colortj mt20 fontw700">Volume 8 (2020)</span>Volume 8 (2020)
Issue 3, Volume 8, 2020
Issue 2, Volume 8, 2020
Issue 1, Volume 8, 2020
Collapse <span class="m110 colortj mt20 fontw700">Volume 7 (2019)</span>Volume 7 (2019)
Issue 3, Volume 7, 2019
Issue 2, Volume 7, 2019
Issue 1, Volume 7, 2019
Collapse <span class="m110 colortj mt20 fontw700">Volume 6 (2018)</span>Volume 6 (2018)
Issue 4, Volume 6, 2018
Issue 3, Volume 6, 2018
Issue 2, Volume 6, 2018
Issue 1, Volume 6, 2018
Collapse <span class="m110 colortj mt20 fontw700">Volume 5 (2017)</span>Volume 5 (2017)
Issue 4, Volume 5, 2017
Issue 3, Volume 5, 2017
Issue 2, Volume 5, 2017
Issue 1, Volume 5, 2017
Collapse <span class="m110 colortj mt20 fontw700">Volume 4 (2016)</span>Volume 4 (2016)
Issue 6, Volume 4, 2016
Issue 5, Volume 4, 2016
Issue 4, Volume 4, 2016
Issue 3, Volume 4, 2016
Issue 2, Volume 4, 2016
Issue 1, Volume 4, 2016
Collapse <span class="m110 colortj mt20 fontw700">Volume 3 (2015)</span>Volume 3 (2015)
Issue 5, Volume 3, 2015
Issue 4, Volume 3, 2015
Issue 3, Volume 3, 2015
Issue 2, Volume 3, 2015
Issue 1, Volume 3, 2015
Collapse <span class="m110 colortj mt20 fontw700">Volume 2 (2014)</span>Volume 2 (2014)
Issue 6, Volume 2, 2014
Issue 5, Volume 2, 2014
Issue 3A, Volume 2, 2014
Issue 4, Volume 2, 2014
Issue 3, Volume 2, 2014
Issue 2, Volume 2, 2014
Issue 1, Volume 2, 2014
Collapse <span class="m110 colortj mt20 fontw700">Volume 1 (2013)</span>Volume 1 (2013)
Issue 6, Volume 1, 2013
Issue 5, Volume 1, 2013
Issue 4, Volume 1, 2013
Issue 3, Volume 1, 2013
Issue 2, Volume 1, 2013
Issue 1, Volume 1, 2013
Journal of Business and Management Sciences. 2014, 2(2), 45-57
DOI: 10.12691/JBMS-2-2-3
Original Research

The Nigerian Petroleum Industry Bill: An Evaluation of the Effect of the Proposed Fiscal Terms on Investment in the Upstream Sector

SANI SAIDU1, and ABDEL RASHEED MOHAMMED2

1Aberdeen Business School, Robert Gordon University, United Kingdom

2Dundee Business School, Abertay University, Dundee, United Kingdom

Pub. Date: July 10, 2014

Cite this paper

SANI SAIDU and ABDEL RASHEED MOHAMMED. The Nigerian Petroleum Industry Bill: An Evaluation of the Effect of the Proposed Fiscal Terms on Investment in the Upstream Sector. Journal of Business and Management Sciences. 2014; 2(2):45-57. doi: 10.12691/JBMS-2-2-3

Abstract

The international oil companies (IOCs) in Nigeria have expressed concern over the federal government’s intention to change the laws governing the oil and gas industry including the fiscal terms. They claim that the proposed fiscal terms will affect their bottom line and trigger uncertainties in their investments in the upstream sector. Therefore, this research was conducted with the aim of evaluating the effect of the proposed fiscal terms on upstream petroleum investment, in which the IOCs are involved. Hence, document analysis and economic indicators of investment profitability were employed in the conduct of this study. The results show that, even though petroleum projects remain profitable under the proposed fiscal terms, the lack of fiscal stability will negatively affect investment at least in the short term. This study should be of assistance to policy makers, legislators, industry regulators and other stakeholders to better appreciate the implications of the PIB-proposed fiscal system and terms on investment in the upstream petroleum sector.

Keywords

Nigerian petroleum industry bill, upstream sector, the international oil companies

Copyright

Creative CommonsThis work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

References

[1]  Abdulkarim, R. 2009. The Fiscal Tools in the UK Petroleum Licensing: How did the UK Attract Investments and What are the Effects of Changing Terms? The Centre for Energy, Petroleum and Mineral Law and Policy Annual Review. June 2009. pp.24.
 
[2]  Addax Petroleum Corporation, 2009. Memorandum on the Review of the Petroleum Industry Bill. Presented at: The House of Representative Joint Committee on the Petroleum Industry Bill 2009, Abuja, 30 July.
 
[3]  Adenikinju, A. and Oderinde, L.O. [no date]. Economics of Offshore Oil Investment Projects and Production Sharing Contracts: A Meta Modeling Analysis. [Online]. Available from: http://www.africametrics.org/documents/conference09/papers/Adenikinju_Oderinde.pdf [Accessed 11 May 2010].
 
[4]  Akhibge, I.J.O. 2008. How attractive is the Nigerian Fiscal Regime, which is intended to Promote Investment in Marginal Field Development? The Centre for Energy, Petroleum and Mineral Law and Policy Annual Review. June 2008. pp.11.
 
[5]  Al-Attar, A. and Alomair, O. 2005. Evaluation of Upstream Petroleum Agreements and Exploration and Production costs. OPEC Review. 29(4). pp.243-266.
 
[6]  Ameh, M.O. 2006. The Shift from Joint Operating Agreement to Production Sharing Contracts in the Nigerian Oil and Gas Industry: Any Benefit for the Players? The Centre for Energy, Petroleum and Mineral Law and Policy Annual Review. February 2007. pp.27.
 
[7]  Blake, A.J and Roberts, M.C. 2006. Comparing Petroleum Fiscal Regimes under Oil Price Uncertainty. Resource Policy.31(2). pp.95-105.
 
[8]  Brock, H.R., Carnes, M.Z., and Justice, R. 2007. PetroleumAccounting: Principles, Procedures, & Issues. 6th ed. Texas: Professional Development Institute
 
[9]  Energy Information administration. 2010. Crude Oil Production. [Online]. Available from: http://www.eia.doe.gov/neic/infosheets/crudeproduction.html [Accessed 01 August 2010]
 
[10]  Energy Information Administration, 2010. Nigeria: Oil. [Online]. Available from: http://www.eia.doe.gov/cabs/Nigeria/Oil.html [Accessed 20 July 2010]
 
[11]  Energy Information Administration. 2010. Short-Term Energy Outlook. [Online]. Available from:http://useconomy.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=useconomy&cdn=newsissues&tm=35&gps=671_504_1276_579&f=10&su=p649.3.336.ip_&tt=11&bt=0&bts=0&zu=http%3A//www.eia.doe.gov/emeu/steo/pub/contents.html [Accessed 02 August 2010].
 
[12]  Faruque, A. A. 2005. Stability in Petroleum Contracts: Rhetoric and Reality: Lessons from the Experiences of Selected Developing Countries and Economies in Transition (1980 - 2002). Thesis submitted to: The Centre for Energgy, Petroleum and Mineral Law and Policy, University of Dundee, Dundee, August 2005.
 
[13]  Fattouh, B. and Darbouche, H. 2010. North African oil and foreign investment in changing market conditions. Energy Policy. 38(2) p.1119-1129.
 
[14]  Fattouh, B. and Mabro, R. 2006. The Investment Challenge. In: Mabro, R. ed. Oil in the 21st Century: Issues, Challenges and Opportunities. New York: Oxford University Press. pp.101-127
 
[15]  Financial Times, 2010. New Bill Puts Nigeria’s Deepwater Oil industry on Hold. [Online]. Available from: http://blogs.ft.com/beyond-brics/2010/06/17/new-bill-puts-nigerias-deepwater-oil-industry-on-hold/ [Accessed 05 August 2010].
 
[16]  GersonLehrman Group, 2010. A Quick Look at Deepwater Statistics for 568 Oilfields. [Online]. Available for: http://www.glgroup.com/News/A-quick-look-at-deepwater-statistics-for-568-oilfields-49026.html[Accessed 05 August 2010].
 
[17]  Gidado, M. M. 1999. Petroleum Development Contracts with Multinational Oil Firms: The Nigerian Experience. Maiduguri: Ed-Linform Services.
 
[18]  Iledare, O.O. 2004.Analyzing the Impact of Petroleum Fiscal Arrangements and Contract Terms on Petroleum E&P Economics and the Host Government Take. In: Proceedings of the 2004 Society for Petroleum Engineers’ Nigerian Annual Conference and Exhibition, Abuja August 2-4 2004.
 
[19]  Iledare, O.O. and Kaiser, M. 2006. Profitability of Deepwater Petroleum Leases: Emipirical Evidence from the U.S. Gulf of Mexico Offshore Region. [Online]. Available from: http://www.onepetro.org/mslib/servlet/onepetropreview?id=SPE-116602-MS&soc=SPE [Accessed 09 May 2010].
 
[20]  Johnston, D. 2003. International Exploration Economics, Risk, and Contract Analysis. Oklahoma: Penn Well Corporation.
 
[21]  Kaiser, M.J and Pulsipher, A.G. 2004. Fiscal System Analysis: Concessionary and Contractual Systems used in Offshore Petroleum Arrangements. Louisiana: Centre for Energy Studies.
 
[22]  KALEJAYE, K. (2014) Non-passage of PIB threatens Nigeria content development. Available at: http://www.vanguardngr.com/2014/04/non-passage-pib-threatens-nigeria-content-development/#sthash.RgjIu0KS.dpuf.
 
[23]  Kemp, A.G. 1992. Development Risks and Petroleum Fiscal Systems: a Comparative Study of the UK, Norway, Denmark and the Netherlands. The Energy Journal. [Online]. Available from: http://www.allbusiness.com/utilities/341119-1.html [Accessed 7 May 2010].
 
[24]  Lukman, R. 2009. Keynote Address by the Honourable Minister of Petroleum Resources on the Proposed Petroleum Industry Bill (PIB). Abuja, 16 July
 
[25]  Mabro, R. 2003. Setting the Scene. OPEC Review. 27(3) pp.187-90.
 
[26]  Mahmud, M. and Russel, A. 2002. Evidence that the terms of Petroleum Contracts Influence the Rate of Development of Oil Fields. OPEC Review. 26(1), p.21-44.
 
[27]  Okobi, N. 2009. To What Extent will Alberta’s New Fiscal Regime Attract Future Exploitation of Tar Sand? The Centre for Energy, Petroleum and Mineral Law and Policy Annual Review. June 2009. pp.29.
 
[28]  Pongsiri, N. Partnerships in Oil and Gas Production-Sharing Contracts. The International Journal of Public Sector Management. 17(5). pp.431-442.
 
[29]  Shell Nigeria (SPDC), 2010. PIB: No Further Investment in Nigeria, says IOCs. BusinessDay newspaper, March 2010. [Online]. Available from: http://www.businessdayonline.com/index.php?option=com_content&view=article&id=9150:pib-no-further-investment-in-nigeria-say-iocs&catid=1:latest-news&Itemid=18 [Accessed 10 March 2010].
 
[30]  The Federal Government of Nigeria, 2008. Petroleum Industry Bill. [Online]. Available form:http://www.nnpcgroup.com/pib/petIndsBillDocs/PIBDrapftBill2008.pdf [Accessed 20 January 2010].
 
[31]  Ugwuanyi, E. 2009. Petroleum Industry Bill stirs controversy. The Nation [Online] Aug 27. Available from: http://thenationonlineng.net/web2/articles/23267/1/Petroleum-Industry-Bill-stirs-controversy/Page1.html [Accessed 15 July 2010].
 
[32]  Van der Veer, J. 2005. What is the International Oil Company of Future Going to Look Like? [Online]. Available from: http://www.shell.com/static/media-en/downloads/speeches/jvdv_oilsummb.pdf [Accessed ].
 
[33]  Vanguard newspaper, 2009. Nigeria: PIB Introduces New Fiscal Regime. [Online] Aug 31. Available from: http://allafrica.com/stories/200908311634.html [Accessed 15 June 2010].
 
[34]  Van Meurs, P. 2008. Government Take and Petroleum Fiscal Regimes. [Online]. Available from: http://www.krg.org/uploads/documents/Government_Take_and_Petroleum_Fiscal_Regimes__2008_06_30_h14m7s53.doc [Accessed 15 June 2010].
 
[35]  Zanoyan, V. 2004. The Oil Investment Climate. Middle East Economic Survey. 47(26).