The Nigerian oil and gas industry has become unattractive for investors for many reasons that are traceable to government actions and inactions.
For instance, the government has stop the funding of the joint venture operations, while the operators and the Nigerian National Petroleum Corporation (NNPC) have to find a creative way to fund these operations.
Majors oil companies have sold what they can because of community problems and prefer to go deep offshore because it has much more potentials.
The majors have strategic advantage in that terrain because it requires both technology and capital.
However, the 2019 Amendment of PSC Act has resulted in all projects being selved.
One of the most serious concerns in the industry at the moment, is the fact that acreage renewal is no longer guaranteed, therefore long term plans can not be made. For instance government revoked Shell OML 11 and handed it over to Nigeria Petroleum Development Company(NPDC),who some industry sources alleged cannot do anything with it
In the arae of litigationa, some of the multinational companies were in court with government over government’s claim of $62 billion owing because terms of the PSCs were not revised by previous governments. It appears that the cases have been withdrawn but damage has been done.
Aiteo bought the Trans Niger Pipeline from Shell and has gone to court for compensation over the condition of the pipeline. The High Court froze all Shell’s bank accounts pending the outcome of the case.
ENI (Agip) and Shell have only just been acquitted following a long, high profile trial in Milan over Dan Etete, a former minister of Petroleum Resources and OML 245.
If it the gas subsector,gas terms are unattractive for gas development and the government seems to not be in a hurry to do anything about it.
Nigerian Content requirements have a substantial impact on project cost and schedule. Operators have to negotiate with the Nigeria n Content Development Monitoring Board (NCDMB) because the requirements of the Act are impossible to meet. Nigerian Content requirements impact production cost, which reduces Nigeria’s competitiveness.
With the discovery of new sources of oil and gas, companies like Chevron and ExxonMobil can, with the shale boom, now get most of the oil and gas they need from within the US. Total and Agip are investing in Mozambique and Tanzania, which are much closer to the Asian markets. Shell is in shale and also the leading company in Gulf of Mexico deep water. It also has a big Canada LNG project.
What would like the most impactful thing on the fossil fuel business is the current Energy Transition which has now become the sing song of the global body, because of climatic change.