3.750
%
Positive
92
mm boe
51
%
Recent liberalisation of NNPC’s ability to finance its shortfall in cash calls will pave the way for an acceleration in growth, but only full scale liberalisation of O&G will allow its full potential to be achieved. Despite the oft well documented issues with corruption, we continue to believe that it is a positive place to undertake O&G activities, and the recent liberalisation supports our Positive outlook.
February 16, 2024
Africa - West
mm bbl
bcf
Western Africa, bordering the Gulf of Guinea, between Benin and Cameroon.
Multiple (PSC/Concession)
Since 1993, the fiscal system for foreign investors has been the PSC. However, most of Nigeria’s production, however, is under joint ventures between NNPC and major oil companies under royalty/tax terms. In addition, indigenous producers also operate small amounts of production under slightly different royalty/tax terms. The long awaited Petroleum Industry Bill ("PIB") radically overhauls the fiscal regime in Nigeria and the fallout has yet to be felt across the sector, especially as it looks as if it might potentially make a number of projects, particularly gas and deep-water fields, uneconomic.
The government has undertaken reforms to help improve the business environment, including facilitating faster business start-up by allowing electronic stamping of registration documents, and making it easier to obtain construction permits, register property, obtain credit, and pay taxes. Foreign direct investment (FDI) inflows nevertheless declined to $422mm in the first eleven months of 2022 (the latest data available) from $581mm during the same period in 2021 as persistent economic challenges remain. Corruption is a serious obstacle to Nigeria’s economic growth and is often cited by domestic and foreign investors as a significant barrier to doing business. Nigeria ranked 150 out of 175 countries in Transparency International’s 2022 Corruption Perception Index, compared to its 2021 rank of 154. Among other complaints, businesses report that corruption by customs and port officials often leads to extended delays in port clearance processes and to other issues importing goods.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
© 2024 Oil & Gas Advisors Limited
Website by Rugby Web Design
