The Federal Executive Council is set to give approval to the nation’s new oil and gas policies in order to stimulate investment and growth in the industry.
Prof. Yemi Osinbajo, the Vice President, who stated this Wednesday at the Oil Producers Trade Section, OPTS 55 anniversary in Lagos, explained that the two policies were drafted to stimulate orderly and sustainable development of the two sectors.
Osinbajo described the new policies as important that would culminate in massive investments into the nation’s petroleum industry, hoping that they would also lead to the making of new oil and gas finds as well as additional reserves.
He acknowledged that Nigeria the nation needs to grow its reserves, especially now that production hovered at about 2.1 million barrels per day, bpd, including condensate.
Osinbajo stated that the government would continue to emerge with new legislations in order to make the industry attractive to foreign and indigenous investors.
In a report obtained by Vanguard, OPTS stated that: ‘’the government does not make money from PSCs. PSC production represents only a small share of total Nigeria oil production. Nigeria would be better off with JVs in deep water. PSC contractors inflate their cost and award contracts without FGN oversight. Fiscal and non-fiscal contract terms for existing PSCs can be adjusted unilaterally.
Contractors are wasting PSC gas that could contribute to FGN income. Investments to develop Deep water fields are similar to investment for Onshore and shallow water fields. Nigeria business environment is globally competitive –even for PSCs. Oil companies are “contractors “not “Concession Holders”.
The report noted “NNPC /government is concessionaire. To share risks, in most PSCs there is one or more contracts with participating interest. Contractors are responsible for providing the funds for investment and bear all the risks (exploration, technical al and execution, market).
‘’NNPC/FGN plays a significant role in the approval and control of budgets and plans, even though they do not contribute to funding. Government entitlements are derived from royalty Oil, tax oil and profit Oil. The government earns more from PSC production than contractors – as of the end of 2016. FGN earned $90 billion.’’
Mr. Nicolas Terraz, Managing Director of Total Exploration and Production Nigeria Limited called for the making of more investment in the deep offshore, adding that commercial finds would be made in the area.
He observed that the deep offshore was a difficult terrain, thus demanding adequate incentives and good polices to attract serious investors into business.
He said ‘’Located some 130 km off the coast of Nigeria at water depths of more than 1,500 m, the Egina oil field is one of our most ambitious ultra-deep offshore projects. For the most part, the project is being developed locally to accelerate the pace of technology transfer and expand the local industrial fabric.’’
Mr. Osagie Okunbor, OPTS Chairman called on the government to constantly review its policies and incentives to make the nation’s oil and gas industry attractive to investors.
