Oil Could Become Worthless, Nigerian Gov’t Warns

Nigeria needs to make the best of its oil wealth before it becomes worthless, the federal government has warned, adding to a growing concern about the future of the world’s most used and most traded commodity.

As the world moves towards a more renewable energy future, crude oil’s participation in the global energy mix will decline over the next two decades, Nigeria’s petroleum minister, Timipre Sylva, said during a meeting with parliamentary leaders.

The meeting was called to discuss the petroleum Industry Bill that should reform the country’s oil industry but has taken decades to draft.

“It is quite unfortunate that since the year 2000 when attempts were made to come up with a draft copy of PIB, to 2007, 2009 and 2012 when draft bills were submitted to different sessions of the National Assembly by the executive arm of government without passage, up till 2018 when the legislators came up with one; that we are yet to put on the ground required laws for effective regulation of the oil industry,” the minister said.

Nigeria is the largest oil producer in Africa, but its oil wealth has been a curse. Rife corruption and environmental damage have plagued Nigeria’s oil history for decades.

The PIB, which parliament is discussing right now, was meant to solve most of the industry’s problems and bring in more oil money by amending the royalty regime and production sharing agreement templates.

The latest update on the discussions was a report that as part of the reforms stipulated in the PIB, the government might take NNPC, the state oil company, private. Apart from the privatization of NNPC, the bill will also amend the newly changed offshore royalties and raise the threshold of the price-based royalty to above $50 a barrel from $35 per barrel.

By Irina Slav for Oilprice.com