Panel of expert have identified high fiscal regimes as an impediment to new investments in Nigeria’s oil and gas industry.
According to them, with a high fiscal regime, it would be difficult to attract new investments and make the industry competitive.
In a panel session at the 23rd Nigeria Oil and Gas (NOG) conference, in Abuja, Country Chairman/Managing Director of TotalEnergies Nigeria, Mr Matthieu Bouyer, said the situation has stagnated the industry as new investments were not coming.
Speaking on the theme of the discussion: “Defining The Outlook For Deep-Water Exploration and Production in Nigeria”, Bouyer said, it was responsible for high operating costs, lack of contractors and the uncompetitive oil and gas industry.
Highlighting increased levies, changes in fiscal terms, comparatively high operating cost have pushed many contractors to leave the country leading to lack of competition in the sector.
With a cost pegged at $30 per barrel, Nigeria has the highest operating cost margins in the energy sector globally.
He said, “The consequence of these has been a shortage of contractors. There have been no significant FIDs in Nigeria since 2013.”
He said that with the deepwater segment of the country’s oil and gas industry in the doldrum in the last 10 years since the Egina Final Investment Decision (FID).
Egina oilfield is one of the TotalEnergies most ambitious ultradeep offshore project, located at about 130km offshore Nigeria at water depth of more than 1,500m.
To address the imbalance, Bouyer urged regulatory authorities to address issues of fiscal regimes.
The second thing for me is being a contractor. What we need to understand is that it is not about them coming back, we need to understand why they left?
“When we tell them to come back, what are the conditions for you to come back? We need to bring fiscals down otherwise. We need to create a competition to put the fiscals at a decent cost. For TotalEnergies it is $20 per barrel, which is our thrash hold worldwide. I cannot go and see my CEO and ask for money if I am above the threshold. It makes our life complex but we have to work around that. For the deep offshore that has been launched, there is also a need for fiscal incentives if we want the projects to be competitive.
“Even with the fiscal incentives, if the costs are too high, investment will not be possible, therefore, there is a need for competition to drive the costs down.
He further said that the company ended gas flaring in all its operations.
“We have zero flaring for Egina and all our new projects, the same thing with FPSOs. I am happy to announce that TotalEnergies stopped flaring from all its Nigerian operations in December last year. It’s a great achievement and I am very proud. It’s not only deepwater; it’s deepwater offshore and shallow water,” he said.