oil gas industry

Total!! fiscal terms, prices, other increase oil, gas industry risk. The Managing Director, Total Exploration and Production Limited, Mike Sangster, said yesterday that, despite a range of potentially viable projects available, no major investment decisions were made in deepwater Nigeria between 2015 and 2019.

He said that uncompetitive fiscal terms, rising prices, unsettled deep-water disputes, and the forthcoming deep-water lease expiry all lead to growing investor risk and preventing new investment.

Represented by the Deputy Managing Director, Deepwater, Mr. Victor Bandele, at the Management Session of the Virtual Nigerian Association of Petroleum Explorationists (NAPE) 2020 conference, Sangster said that Total welcomes the efforts made by the authorities to establish a long-term structure for the oil and gas industry that offers clarification and assurance as well as attractive terms and conditions that translate into action.

“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 he firm had in the country that led to the development of 200,000 barrel per day Egina field with first oil in 2018 when the investment climate was not most appealing.

According to him, Nigeria is crucial to Total Group as it accounts for about 10 per cent of its equity production.

The theme of the session was “Future of oil and gas industry in low oil price environment: survival strategies.”

The Managing Director 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.”

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Following the company’s faith in Nigeria, he said it spent an annual 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.”

He said 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 continent.

“Nigeria has only benefitted from less than five per cent of all investments in oil and gas in Africa between 2015-20191 despite having the largest reserves.

“That is to say that, the $3billion invested in Nigerian projects which took Final Investment Decision (FID) between 2015 and 2019 represents five per cent of all oil and gas funds invested in Africa,” he said.

In his goodwill message, the Society of Petroleum Engineers (SPE), chairman, Mr. Olatunji Akinwunmi said the theme of the conference was apt. He expressed hope that it would be facilitated between industry experts, academics and government representatives around this important and would lead to immediate positive actions in the resuscitation of exploration of the Niger Delta and other basins within Nigeria endowed with very significant and world-class yet-to-find exploration potentials.

In terms of technical attractivity, according to him, the proved prolific Niger Delta Basin in which over 90 billion barrels of oil and gas have been discovered is still a preferred destination.

“By some estimates, there might be remaining exploration potential of up to 20Gboe, a significant portion of which could be gas, a transition fuel whose contribution is expected to grow in the overall energy mix, and which could and should also contribute to the accelerated development of the nation,” he said.

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The SPE chair said despite this huge exploration potential and the presence of major IOCs as well as local players in Nigeria, there has been no significant exploration effort in the past decade: the efforts and the achievements of exploration in the oil and gas sector are not at all aligned with the enormous potential.

According to him, there are several apparently stranded, but potentially cash-accretive major discoveries in the deep water with no immediate development strategy in sight, also limiting the capacity of operating companies to fund future-building exploration activities.

He said access  to new acreage as well as attractive governance and fiscal terms are some of the key enablers to unlock our enormous potential; this is an area where co-operation between the industry, the government, and the key government agencies is essential to formulate and implement policies that would enhance the value-creation of our industrial activities from exploration, through development and production to field abandonment.

He added that “And this especially essential in a situation where the space is reduced by geographical head-winds: competition from other countries with more attractive fiscal terms; as well as financial head-winds: funds for E&P development is globally more scarce in light of the planned gradual transition from fossil fuels dependence to an energy mix that would have increasing contribution from renewables. There is every need to encourage and support speedy win-win resolutions of the outstanding blocking points in the new PIB as time is not on our side.”

9jatalks Business News

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