LONDON - Landmark legislation intended to reform Nigeria's oil sector is set to introduce harsh fiscal terms that could deter $109 billion worth of new investment in the coming years, according to Nigeria's oil industry trade body.
The bill, currently under discussion in Nigeria's parliament, would make Nigeria one of the harshest investment climates in the world for the oil industry, said Mark Ward, head of Exxon Mobil Corp.'s (XOM) Nigerian unit in a presentation given Tuesday and seen by Dow Jones Newswires.
Mr. Ward was speaking in his capacity as chairman of the Oil Producers' Trade Section of the Lagos Chamber of Commerce.
According to the presentation, the unfavorable fiscal terms would result in Nigeria's oil production hitting a plateau of about 3 million barrels a day around 2016, and then start to decline as $109 billion in planned new investment would no longer be economically feasible.
Members of Nigeria's oil ministry and National Assembly weren't immediately available to comment, however Oil Minister Alison Madueke said in a statement released Tuesday by the country's state oil company that proposed changes to the oil industry are designed to increase exploration and development activities by creating a more competitive environment.
Nigeria has long planned a thorough overhaul of its oil industry, encompassing everything from tax rates to environmental laws to the structure of the country's state-owned oil company, but the bill has stoked controversy and drawn strong criticism from the oil sector.
Uncertainty over the bill's passage has already taken its toll on the industry.
Last year, Nigeria's Department of Petroleum Resources said the country's recorded reserves had fallen to 36.5 billion barrels from 37 billion barrels in 2010 as a result of a slowdown in investment linked to uncertainty over the bill
Nigeria is West Africa's largest oil producer.
Copyright (c) 2012 Dow Jones & Company, Inc.
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