* Proposed reforms will change fiscal framework
* Shell optimistic agreement can be reached
* Says no comparison between Niger Delta, U.S. Gulf spill
By Nick Tattersall
LAGOS, June 17 Royal Dutch Shell (RDSa.L) has
some $40 billion worth of potential investment in deepwater oil
projects in Nigeria on hold amid uncertainty over planned
reforms to the energy sector, a senior executive told Reuters.
Mutiu Sunmonu, country chairman for Shell Nigeria, said it
was difficult to make commitments without clarity over the terms
of the Petroleum Industry Bill (PIB), legislation which will
change the fiscal and regulatory framework in the OPEC member.
"Just looking at deepwater alone, we have a portfolio of
about $40 billion worth of projects...but we will not be able to
make a move on these until we have a landing on the PIB," he
said in an interview at his Lagos home late on Wednesday.
"(That is) potential investment that we are not able to sign
off on at this time," Sunmonu said, adding the investment
covered six or seven deepwater projects whose timeframe depended
on how quickly they could be funded and executed.
Shell said in February the oil industry as a whole invested
around $4 billion in Nigerian deepwater projects in 2009 and
that it expected offshore production to rise to about 1.5
million barrels per day (bpd) by 2015, equivalent to half the
country's current installed capacity. [ID:nLDE61M15J]
Nigeria says the PIB will make state oil firm NNPC more
competitive and transparent, encourage investment, promote local
oil company involvement in the industry and increase gas
supplies to the dilapidated domestic power sector.
But international oil companies are worried the bill will
impose higher taxes and royalties while failing to address key
issues of under-funding, corruption and security.
The bill has been repeatedly delayed by revisions and
disagreement. It has stalled again in its final stages as
President Goodluck Jonathan, who took over last month following
the death of late President Umaru Yar'Adua, and new Oil Minister
Diezani Allison-Madueke revisit some of the issues.
With elections due by next April at the latest, the new
administration has little time to push the bill through, but
Sunmonu voiced optimism that differences could be overcome.
"The present government is determined to pass the PIB... I
know the minister is planning to have a meeting with captains of
industry to further consult with us on how to close the gap."
Sunmonu also said he had brought to the oil ministry's
attention the need to renew onshore licences which lapsed under
the previous administration, saying government had pledged to
"dispose of all these legacy issues as quickly as possible."
NO COMPARISON TO U.S. GULF
Sunmonu said security in the Niger Delta, where three years
of militant attacks since early 2006 have prevented Nigeria from
pumping much above two thirds of its 3 million barrels per day
(bpd) capacity, had greatly improved since an amnesty last year.
But he said bunkering -- the theft of industrial quantities
of crude oil -- had increased.
"I think there is an increase in the level of bunkering in
the last few months, there is an upward swing. I always use an
estimate of about 100,000 bpd and I don't think that would be
too off the mark," he said.
Although only a portion of that stolen oil is spilled, it is
around twice the level leaking into the U.S. Gulf of Mexico,
according to a team of U.S. scientists, who on Tuesday raised
their high-end estimate to between 35,000 and 60,000 bpd.
The Niger Delta, home to Africa's biggest oil and gas
industry, has suffered decades of pollution from spills which
have been left to fester, damaging the air, soil and water.
The U.S. government's all-out fight to contain the BP (BP.L)
(BP.N) oil spill in the Gulf of Mexico is a marked contrast to
the situation in the Niger Delta, leading local communities and
campaigners to ask why Shell and other international oil firms
in Nigeria are not paying compensation. [ID:nLDE65E0YZ]
Sunmonu said the comparison was not fair, noting that
between 2000-2007 10,000 barrels a year were spilled on average
from Shell operations in the Niger Delta, 70-75 percent of them
the result of sabotage or oil thieves drilling into pipelines.
In 2009, just 2 percent of spills were caused by factors
within Shell's control, he said.
"It is incorrect to draw a parallel ... The law in Nigeria
is very clear. We do not pay compensation for sabotage spills.
And I think the intent of the law is correct," he said.
"If you pay for sabotage spills then you are only fuelling
more sabotage and more spills. Where a spill happens as a result
of our own error or equipment failure, we do pay compensation."
The Anglo-Dutch giant says it paid $4 million in
compensation last year and cleans up all spills whatever their
cause, although communities or armed gangs sometimes deny it
access to spill sites.
Sunmonu said he was not concerned by China's reported
ambition to secure 6 billion barrels of Nigerian oil, saying
Shell was "not afraid of competition." [ID:nLT576633]
Analysts say China is most likely to access Nigerian
reserves by snapping up acreage in new licensing rounds rather
than buying existing operations. But China has approached the
Nigerian government about some blocks held by Western firms.
Sunmonu said he was not aware of any direct approach to
Shell by China about buying stakes in Shell Nigeria joint
(For more Reuters Africa coverage and to have your say on the
top issues, visit: af.reuters.com/ )
(Editing by James Jukwey)