The Nigerian government has signed an agreement with oil giants that aims to reduce the length of the award process for oil development projects to six months for existing Production Sharing Contracts (PSCs).
The pact, a memorandum of understanding that also serves as a service level agreement (SLA), is “aimed at rapidly increasing Nigeria’s crude oil production, ensuring compliance with the provisions of the Content Act Nigerian and timely approval of documents,” the Nigerian Content Development and Monitoring Board (NCDMB) said in a press release on Monday, referring to a law that regulates oil and gas development projects. Besides the council, other signatories included Nigerian National Petroleum Co. Ltd. (NNPC), Nigerian Agip Oil Co. Ltd. and subsidiaries of Chevron Corp., Shell PLC, Exxon Mobil Corp. and TotalEnergies SE. The NNPC is the concessionaire of the PSCs held by the multinationals.
“The SLA was conceptualized by the NCDMB and aims to optimize the procurement cycle in the oil and gas industry and stimulate the rapid development of new oil and gas projects, contributing to increased oil production and improving the economy national,” said the NCDMB.
NCDMB Executive Secretary Simbi Kesiye Wabote noted that the first SLA of its kind for the oil and gas industry in Nigeria was signed in May 2017 with Nigeria LNG Ltd. “[T]The industry found the result impressive, prompting the Independent Petroleum Producers Group to sign the SLA in 2018 and then the Petroleum Producers Trade Section,” Wabote said in Monday’s announcement.
“The Executive Secretary stated that the overall goal is to conclude the oil and gas industry’s bidding for contract award processes within six months, and stated his belief that the goal is realistic with all key parties now agreeing to the execution of the SLA,” it read. the ad
The West African nation is targeting oil development projects worth more than $50 billion in the next five years, the NCDMB said earlier. The projects were presented at the Nigerian Oil and Gas Opportunities Fair (NOGOF) in May.
“Some of the opportunities come from indigenous players, some from NNPC Ltd and the international oil companies. If you put them together, in the next five years it would exceed $50 billion that would be invested in the Nigerian oil and gas industry” , Wabote told the meeting, as quoted in an NCDMB press release.
In one of the projects, Shell Nigeria Exploration and Production Co. (Snepco) is expanding the development of its Bonga oil field. The northwestern section of the field that is already operational can produce about 65,000 barrels of oil equivalent per day, Snepco said in a February 13 press release.
Of the projects proposed at previous NOGOFs, most “have come to fruition,” but “others are challenged by security issues, challenges of final investment decisions, bankability and regulatory requirements and approvals,” Wabote said at the show .
The NCDMB official called for the removal of “policy inconsistencies” and urged relevant agencies to pass supplementary laws to the Petroleum Industry Act “to give investors the necessary confidence to move forward,” he said the May press release.
Adopted in 2021 to replace the Petroleum Law, the new legislation provides support for infrastructure financing, investment promotion and a simplified tax on hydrocarbons. The Midstream and Downstream Gas Infrastructure Fund contained in the law aims to grow the national market for natural gas produced from projects financed with private funds, as well as to allow risk sharing to encourage private investment. Meanwhile, the collection of the tax on fossil fuels has been limited to “crude oil, as well as field condensates and liquid natural gas liquids derived from the associated gas and produced in the field upstream of the measurement points”, as as stated in the text of the legislation.
Oil is a key contributor to Nigeria’s economy. Oil and natural gas accounted for 5.34 percent of the country’s real gross domestic product in the second quarter, making the sector the fourth largest component of the economy behind crop production, trade and telecommunications and information services, according to a report by the Nigerian National Bureau. Statistics published on August 25.
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