March 29 - Nigeria's amnesty has not delivered the intended results. Oil wealth has not percolated through society, and many of its citizens are still feeling marginalized. But promises of market reform and hopes for a more settled future continue to tempt producers.

In early March, Nigeria's Central Bank issued a report on the performance of the country's economy in the first two months of 2010.

It found that while the projected outlook was encouraging, it hinged on a sustainable peace in the Niger Delta. That would allow the OPEC member to pump more crude.

As oil accounts for more than 80% of the Nigerian government revenue, the central bank wants the government to show strong commitment to see through its reform of the sector for to achieve the robust growth projections.

The twin issues of sustaining the relative peace in the Niger Delta -- home to Africa's biggest oil and gas industry -- as well as the stalling of a Petroleum Industry Bill -- formed the major talking points at a conference held late in February in the country's federal capital Abuja.

 The Petroleum Investment Bill (PIB) is intended to give legal backing to Nigeria's bid to reform its oil sector, but it put Nigeria and its foreign oil partners at loggerheads.

Delegates used the conference to reiterate their view that Nigeria risked the loss of vast sums in investment, if the PIB were not amended.

"Industry will lose heavy investment of up to $50 billion if the Petroleum Industry Bill is passed in this form," said the immediate past executive vice president for Anglo-Dutch major Shell's sub-Saharan Africa division, Ann Pickard.

The area that Pickard said would be hard hit is deepwater operations, which had sustained Nigeria's oil production at a record output of 700,000 b/d as at end 2009.

At that time, onshore and swamp operations came under militant siege. Oil companies, both local and foreign, agreed that the bill would make the Nigerian production sharing contract regime among the harshest in the world and "will effectively end investment into Nigeria's deepwater."

This position was shared by the managing director of Chevron Nigeria, Andrew Fawthorp. He said that the current legislation would drastically slow down deepwater growth, and called for dialogue to ensure that the government's well-thought out aspirations were achieved by the PIB and not inadvertently derailed.

And the chief operating officer of Eni's international exploration and production division Claudio Descalzi said although Eni was prepared to double its investment in Nigeria's oil and gas industry, the uncertainty surrounding the new legislation remained a major hurdle.

Based on investments previously committed by foreign companies at least up until 2005, Nigerian offshore oil output alone is projected to rise to 1.5 million b/d by 2015, according to industry estimates.

However, investment decisions have stalled on deepwater projects since 2005, which had seen Nigeria's share of global oil production drop by over 30%. As a result, it is now forecast that offshore production by Angola, Nigeria's main rival in Africa, may double that of the West African nation by 2020.

A local industry analyst said that Angola and Ghana could both upstage Nigeria if investment dried up there.

PIB slow to start up

The PIB has actually been on the drawing board for over a decade. It seeks to break up the state-run Nigerian National Petroleum Corporation into five new autonomous entities that include a profit-driven national oil company.

It will allow the government to renegotiate some deep offshore oil production contracts, mainly from the 1993 bid round and to impose higher royalties and taxes while all future oil and gas exploration and production contracts will require renegotiation clauses.

And it gives the government the option of seizing unused oil acreage from companies to hand over to new investors.

The bill is held up in the National Assembly where debate by lawmakers has been slow. The NNPC has called for a quick passage of bill saying that Nigeria was now losing additional revenue of $287 million every month that would otherwise have accrued from the fiscal terms of the new law.

The gains will come in the form of opportunities for local oil services to increase their participation in the industry, NNPC spokesman Levi Ajuonuma said.

Research shows that 80 cents in every US dollar invested in the oil industry goes offshore, he said. "That is why PIB is talking about local content. Under PIB no oil company can import cooks and stewards from their country to work in Nigeria as expatriates," Ajuonuma said.

Nigeria's acting president, Goodluck Jonathan, said he was committed to the oil sector reform which he insists would serve Nigeria's national interest.

Jonathan, who assumed full executive powers on February 9 following the prolonged absence of the incumbent president Umaru Yar'Adua who is undergoing treatment for heart-related disease, said ensuring the bill passed quickly was one of his top priorities.

"I want to reassure Nigerians and our foreign partners of our unwavering commitment to pursuing the reform in this sector with an eye on our national interest primarily and also in meeting the market demand for energy security," Jonathan told delegates at the conference.