In 2019, the oil and gas industry was responsible for around 5.8% of
- In August, NNPC agreed on new terms and conditions for six offshore licences controlled by international oil corporations (IOCs).
- The new legal dispensation does not mean that the majors' future activities in
Nigeria will be easy. - Even if oil prices stay high, the value of Nigerian oil will never recover to the levels reached only ten years ago.
Landmark legislation in
In 2021, Nigerian President
The PIA is an attempt by
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PIA has now been in force in
If correctly and rigorously implemented, the PIA is the gold standard for managing natural resources with defined and distinct duties for the industry's subsectors. The Act establishes a profit-driven, commercially-inclined
Consequently, the PIA will contribute to host communities' social and economic development via environmental cleanup and a business climate favourable to the growth of oil and gas activities in the nation. However, these outcomes are contingent on
Fresh agreements with international oil companies
In August, NNPC agreed on new terms and conditions for six offshore licences controlled by international oil corporations (IOCs). The agreement will potentially bring considerable volumes of underutilised production to the market within the next decade.
It also reflects a new, more upbeat atmosphere among
Over a 20-year timeframe, these five deep-water zones might generate up to 10 billion barrels of oil. Their signings are a testament to the effectiveness of negotiations between NNPC and the majors in smoothing out quirks in previous contracts that had impacted corporate revenues.
Disputes over
The new legal dispensation does not mean that the majors' future activities in
The NNPC attempts to obstruct the sale because it sees a possible chance of owning the assets. Consequently, there is now a meaningful possibility of prolonged controversy. The controversy will thwart majors' aspirations of selling off a portion of their onshore and shallow water assets - with Total likely having to wait out
The authorities seem willing to let the deal to Seplat go ahead. The most significant challenge was NNPC attempting to pre-empt the transaction. If the government had desired that NNPC acquire those assets, it might have created an environment in which that would have occurred.
The crude oil output fall
In May of this year, crude oil output fell by 23.8%, hitting a low of 1.02 million barrels per day. The background will see
According to Fitch Solutions' oil and gas team,
As Fitch's emerging markets analyst
Despite a blip in 2026-27, when some offshore capacity will enter the system, Ashbourne does not anticipate that output levels will expand much in the future. But, generally, volumes have been constant and consistently lower than they were. Looking at the 2010 -2015 period, when levels were close to 2.5 million barrels daily, there is no way to return to that level.
Even if oil prices stay high, the value of Nigerian oil will never recover to the levels reached only ten years ago. Moreover, policymaking might be postponed until the presidential poll in 2023. It may take even more time while the next government settles.
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There is an improvement to report in
Long-term enthusiasm in
The nation's natural gas potential fascinates majors much more than its troubled crude oil resources in the Delta. The oil and gas sector is expected to remain a future source of export development. Nevertheless, it may still make sense for the most extensive and seasoned IOCs to maintain the course in
Looking at the oil and gas sector beyond the transition phase
With the 2023 polls approaching,
In addition, it prepares the way for the professionalisation of the loss-making state-owned
There is still plenty to accomplish. Even after a year, the PIA is still in a transitional period, with committees deliberating its practical implications. One seasoned Nigerian expert questioned how much the NNPC would change due to its transition into a limited liability corporation. Still, post-PIA data suggests that
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