LAGOS, Sept 29 (Reuters) - Nigeria's oil reform bill is now
with the National Assembly. Due to the political alignment of
the legislature with the presidency, it has the best chance of
passing into law in the 20-year history of reform efforts.
Experts and international companies say it is crucial to
Nigeria's aim of attracting investment in an era of abundant oil
and a shift toward greener fuels. AND ROYALTIES
* The bill would amend contentious changes to the
government's take of deepwater oil made last year.
* For fields producing more than 15,000 barrels per day
(bpd), it would cut the tax to 35%, from 50%, and leave
royalties at 10%. For fields producing less, the royalty would
be 7.5%.
* Ghana, in comparison, has a 5% royalty and 35% tax on its
deepwater production.
* For onshore fields, it would cut the tax to 72.5%, from
85%, and cut the royalty to 18% from 20%.
* In comparison, the Permian in Texas has 21% tax and
royalties that are in the mid to high single digits.
* It would also raise the oil price at which a sliding scale
of higher royalties kick in to $50 per barrel.
NEW REGULATORS
* Oversight would be split into new entities covering
upstream, midstream and downstream. An entity called the
Commission would take over oil and gas licensing.
* The Commission would publish all contracts, licences and
leases on its website.
* Nigeria's oilfield licence awards have faced controversy;
OPL 245's award is the subject of multiple court cases alleging
corruption.
* Countries such as Angola have established regulators
outside the state oil company or oil ministry in an aim to take
politics out of licence awards and make them transparent.
* The new downstream regulator, the Authority, would also be
allowed to set fuel prices if it determines there is not enough
competition.
CHANGES TO STATE OIL COMPANY
* The ministries of finance and petroleum would transfer the
assets of state oil company NNPC into a limited liability
corporation (LLC).
* The new LLC it would operate as a commercial entity
without access to government funding. However the bill does not
explicitly state that it would keep all its revenues.
* The bill does not outline a requirement for the government
to sell shares to others, meaning it would not necessarily be
"privatised".
* Many state oil companies, including African oil companies
such as Sonangol, have aspects of their operations that are
incorporated in similar ways. If run properly, they can aid
transparency and help them raise funds.
LOCAL COMMUNITIES
* Oil companies would have to set up host community
development trusts, and pay 2.5% of annual operating expenditure
in the given area toward them.
* Few other oil and gas producing countries face the scale
and complications of community relations that they experience in
Nigeria's restive Delta region.
* The new requirement is in addition to fees that companies
now pay to the Niger Delta Development Commission.
GAS
* The bill would bar companies from deducting gas flaring
penalties from their taxes, firmly closing an avenue that some
used to defray the costs of burning gas.
* Companies would also have to supply a set amount of gas,
determined by the new regulator, to the domestic market or face
penalties of $3.50 per 1 million British Thermal Units (mmbtu)
* Companies can avoid penalties in the case of a force
majeure, or if they cannot transport the gas or find a suitable
paying buyer.
* While Nigeria is eager to expand domestic gas use, few
other nations mandate the amount of gas that must be sold
locally.