Page 4 - AfrOil Week 12 2021

AfrOil COMMENTARY AfrOil

Outlook cautious for

Nigerian deepwater fields

Passage of a the Petroleum Industry Bill (PIB) will not remove all obstacles

to deepwater investments by IOCs, according to Welligence Energy Analytics

JUST a few years ago, Nigerian National Petro- it was not offering sufficiently attractive terms
leum Corp. (NNPC) was decidedly confident to international oil companies (IOCs). Indeed,
WHAT: about the potential of its deepwater oilfields. It he asserted, the country is losing investment
Nigeria’s plans for was so confident, in fact, that it said it expected to other African states because its deepwater
building up production at the share of total crude output coming from the regime is one of the least competitive in the
deepwater oilfields have deepwater section of the offshore zone to rise region.
lost momentum in recent from around 50% in 2018 to nearly 67% by 2022. Omo-Agege indicated, though, that he
years. Many industry observers were similarly believed Nigeria could regain some momentum
upbeat. In late 2018, for example, Cheta Nwanze, once it passed and enacted the Petroleum Indus-
WHY: the head of research at Lagos-based risk advi- try Bill (PIB). Taking this step should make the
The slowdown stems sory service SBM Intelligence, told Bloomberg country’s oil industry more competitive, more
partly from disruptions he expected deepwater projects to steal the spot- profitable and more capable, he said.
in world energy markets light from onshore fields with respect to both
and partly from develop-
ments within Nigeria. production and revenues. Changing conditions
“The fiscal terms are much better than Nigeria’s apparent loss of confidence is not sur-
WHAT NEXT: onshore as of today, and this implies that in prising, given that conditions in the country’s oil
IOCs are likely to remain addition to less concern about security, interna- industry have changed since late 2018.
cautious about deepwater tional producers get a bigger share of the pie,” he One reason for that is the fact that oil prices
projects until they learn commented. have declined markedly since that time. But
how Abuja intends to This confidence was not much in evidence another is the Nigerian government’s passage of
implement the PIB. earlier this month, when Ovie Omo-Agege, an amendment to the Deep Offshore and Inland
the deputy president of Nigeria’s Senate, fretted Basin Production-Sharing Contract Act in 2019.
about the slow pace of development in the deep- Its ostensible reason for doing so was to ensure
water offshore zone. At a virtual colloquium that it received a fair share of the total income
organised by NewsGuru.com, Omo-Agege said from deepwater projects, but many IOCs inter-
Nigeria was having trouble on this front because preted it as a revenue grab at their expense.

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