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Oil companies to meet Nigerian government over Petroleum Industry Bill

Royal Dutch Shell, Chevron, ExxonMobil  are planning to meet officials of Nigerian government  this week to persuade the government to ease tough new terms in draft legislation.

This is coming in the wake of a Chinese company’s bid for stakes in prime fields.

They are also locked in negotiations over leases to oil fields they have held for 40 years, with the government asking for billions of dollars to renew them.

The Financial Times revealed last month that CNOOC, one of China’s big three energy groups, had proposed buying 49 per cent stakes in 23 blocks, including some of those up for renewal, in order to secure up to a sixth of Nigeria’s crude reserves.

“There’s a proposal from CNOOC that the government is considering on its merits,” Odein Ajumogobia, minister of state for energy, told the FT. “Then also these leases expired a year ago and we’re anxious that they are renewed. Those two discussions are going on simultaneously.”

One-year extensions taken out by Exxon and Chevron will run out at the end of next month. Shell won a court injunction blocking any change of ownership on its leases.

Mr Ajumogobia said there was no “bidding war” for the leases but industry insiders said the Chinese interest had strengthened the government’s hand in demanding higher renewal fees.

Chevron’s initial offer was about $100m (£62.56m, €67.79m) and ExxonMobil proposed $78m, while the government has asked for $3bn and $2.5bn respectively, said industry insiders.

The Petroleum Industry Bill would raise the government’s take from the foreign companies’ share of oil and gas ventures to 93 per cent from 82 per cent, according to KPMG, the audit firm, placing Nigeria’s regime among the world’s strictest.

Mark Ward, managing director of Exxon in Nigeria, has said that under the draft terms “all new planned projects would be uneconomical”.

Mr Ajumogobia said the groups were assuming “extraordinarily high costs – some of them unaccountable” in their projections, including an “emergency scenario” in the oil-producing Niger Delta.