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Oil majors have pegged their investment decisions on the outcome of the Petroleum Industry Bill (PIB), and other fiscal frameworks by the Federal Government.
According to them, the country did not take any major investment decision in deepwater between 2015 and 2019, despite a number of available potentially viable projects.
The African Energy Chamber (AEC), in its African Energy Outlook 2021, had disclosed that with the $24 billion loss of investments in the oil and gas sector, Nigeria would account for 30 per cent of the total of $80 billion loss of investments that would be recorded in the petroleum industry across Africa.
Speaking during the management session of the virtual Nigerian Association of Petroleum Explorationists (NAPE) 2020 conference, the oil majors, including Shell and Total, noted that uncompetitive fiscal terms, increasing cost, unsettled deep water disputes, and upcoming deep-water lease expiry all contribute to increase the risk for investors and prevent new investments.
The Managing Director, Shell Nigeria Exploration and Production Company, Bayo Ojulari, said investors want to see clear policy direction from the government before raising their stake in the industry.
He stressed the need for incentives for the players in the sector to go after idle treasures underpinned by a win-win disposition, as well as sanctity and security of contracts.
On his part, the Managing Director, Total Exploration and Production Limited, Mike Sangster, noted that despite bearing the largest reserves in oil and gas in Africa, Nigeria’s benefits from investments in the industry between 2015 -2019 was below five per cent of the total sectoral investments in the continent.
Sangster, represented by the Deputy Managing Director, Deepwater, Victor Bandele, said Total welcomes the efforts being made by the authorities to define a long-term framework for the oil and gas industry that provides clarity and certainty as well as attractive terms, which translate to a win-win solution for the country and investors.
“This will further attract more capital investment in an ever more competitive world. A progressive, win-win PIB will no doubt be the catalyst needed for a new wave of hydrocarbon exploration and development investment in Nigeria,” he said.
He said the oil major has invested about $10 billion in Nigeria from 2013 to date, adding that the company would flag-off the drilling of its IKIKE project by 2021, noting that it was with the faith that the firm had in the country that led to the development of 200,000 barrel per day (bpd) Egina field with first oil in 2018, when the investment climate was not most appealing.
According to ndustry in a low oil price environment: survival strategies.”
Sangster said: “We have also taken steps to drive down our green-house gas emissions; pursuing a zero-flare principle on all our new projects as is evident with EGINA, OML58 upgrade, OFON field and others.”
Following the company’s faith in Nigeria, he said it spent a yearly Corporate Social Responsibility (CSR) of over $40 million.
He said: “We maintain at least 19 MoUs with our host communities. The MoUs facilitate a seamless delivery of sustainable development to our host communities.”
Anderson Gail of Wood Mackenzie, while speaking on, “How to survive in a low oil price environment,” said while Nigeria has traditionally enjoyed demand for its light sweet crude, its high cost of production, high government share in joint ventures and other risks affect its chances of developing new fields.
She however noted that while oil producers are exposed to price volatility and high operating expenses, gas can be a buffer against both.

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