UPDATE 1-Nigerian oil firm fears key energy law will be derailed

Tue Feb 19, 2013 9:00am EST

ABUJA Feb 19 (Reuters) - Nigeria's long-delayed oil bill, which could unlock billions of dollars of investment, may never become law, the head of the country's biggest oil company said on Tuesday.

The Petroleum Industry Bill (PIB) being debated in parliament would change everything from tax levels for foreign oil majors like Shell and Exxon, to the structure of the state energy company.

It has been in the works for five years but government, lawmakers and oil companies have been unable to agree on the much-needed changes to Africa's biggest energy business.

"I find it difficult to see how we will end up with a PIB by the end of this year," Oando Chief Executive Wale Tinubu told an industry conference in Abuja, adding that further delays because of national elections in 2015 could derail the bill completely.

A senior Nigerian lawmaker, who asked not to be named, told Reuters this week that the PIB would need to be overhauled before the national assembly would consider passing it.

An earlier draft failed to make it through parliament.

Tinubu highlighted the restructuring of state oil company NNPC and new higher tax rates for offshore drilling as two areas where oil companies and the government remain divided.

Heavily indebted NNPC, found by several audits and reports to be rife with corruption, has struggled to meet its share of investment in joint ventures with overseas companies. This has proved another drag on attempts to boost Nigerian oil production of 2 million barrel a day.

The PIB would restructure NNPC and partially privatise the company, but some industry experts have said that it does not go far enough in making the company independent from political interference.

The bill also includes plans to increase the taxes oil majors pay on deep offshore fields, but companies such as Shell , Exxon and Chevron have said that this would prevent them from investing offshore.