Page 4 - DMEA Week 36 2022

DMEA COMMENTARY DMEA

(Image: Vallourec)
Could Nigeria’s oil industry

be entering a new era?

The African Energy Chamber believes the PIA is already yielding positive results, writes NJ Ayuk

WHEN Nigeria’s Petroleum Industry Act (PIA) Investments had stalled as a result of ongo-
was signed into law in August 2021, I spoke ing disagreements over revenues and taxes. But
WHAT: about the positive changes the law would be after protracted negotiations, NNPC and the
NNPC Ltd is showing driving in terms of increased transparency and companies were able to minimize the revenue
signs of being an energy sector productivity. and tax ambiguities that had existed in the ear-
improvement on its Now, we’re seeing indications that the PIA is, lier contracts and move forward amicably with
predecessor. indeed, yielding fruit. the oil companies, which include Nigerian com-
The state-owned Nigerian National Petro- pany South Atlantic Petroleum, Chevron (US),
WHY: leum Corp. (NNPC) recently became Nigerian ExxonMobil (US), Equinor (Norway), Shell
This is in line with the National Petroleum Co. Ltd (NNPC Ltd), a com- (UK) and Sinopec (China). This is a significant
intent of the PIA, which mercial venture, as mandated by the PIA. Rather accomplishment with the potential to revitalize
aimed to make the na- than operating as a government entity, with all of Nigerian exploration and production, foster-
tional oil company more
transparent and efficient. the red tape and inefficiencies that went with it, ing energy security and stimulating economic
the company’s focus has been shifted to produc- growth as a result.
WHAT NEXT: tivity and earning profits. Some have argued that NNPC’s transforma-
Concerns about govern- The company appears to be moving in that tion will be in name only, particularly since it
ment interference will direction. Early this summer, NNPC Ltd suc- still will be owned by the Nigerian government.
linger, but the company cessfully re-negotiated production-sharing But renegotiating those PSCs is a promising sign
has an opportunity to contracts (PSCs) with multiple oil majors and an that its existence as a commercial operation will
change its focus and its indigenous company after nearly 30 years of dis- not be business as usual.
operating paradigms. putes. The PSCs involve five deepwater blocks While there are no guarantees that the news
believed to be capable of producing as much as about the company will always be positive going
10bn barrels of oil over a 20-year period. forward, I am cautiously optimistic.

P4 www. NEWSBASE .com Week 36 08•September•2022