Would you like to receive notifications on latest updates of the following headlines?

FG's deep-water investment plan faces mixed reactions amid $82bn exodus

POSTED ON October 7, 2024 •   Breaking News      BY Abiodun Saheed Omodara
Refinery

The federal government has approved a comprehensive tax relief package aimed at attracting investment in deep-water operations.

This initiative comes as the industry faces challenges from underinvestment, declining crude oil production, and the ongoing exit of international oil companies.

Recent data indicates that Nigeria has not seen any new investments from IOCs in over a decade. The last major deep-water project was the $3.8 billion Egina Floating Production Storage and Offloading project by TotalEnergies, completed in 2013.

This prolonged period of inactivity underscores the urgent need for the government’s new tax relief package to attract fresh capital and revitalize the sector.

In stark contrast, these IOCs have invested over $82 billion in offshore assets across other countries during the same period, highlighting Nigeria’s critical crossroads in the oil and gas sector.

In response to this trend, the federal government’s recent approval of tax incentives aims to reverse the tide.

The Special Adviser to the President on Energy and head of the Energy Office of the Presidency, Mrs. Olu Verheijen stated that the initiative is expected to attract approximately $10 billion in investments soon, positioning Nigeria once again as a competitive destination for oil and gas investments.

“This is the pool of funds that our reforms are targeting, and we intend to unlock between $5 billion to $10 billion of new investments in Nigeria in the near- to medium-term,” Verheijen said.

However, stakeholders and experts remain skeptical about the potential for future investments, cautioning that new tax measures alone may not suffice.

Many assert that the government must address the underlying issues that led to the exodus of international oil companies in the first place.

Without tackling these deeper challenges, the effectiveness of the tax relief package may be limited, leaving the sector in a precarious position.

The Petroleum Industry Act, enacted in 2021, was intended to serve as a legislative framework to enhance investment in Nigeria’s oil and gas sector.

However, experts contend that it does not adequately address the ongoing challenges of bureaucracy and red tape that impede investment.

They warn that without effectively tackling these barriers, any new tax measures could ultimately be counterproductive, failing to attract the necessary capital for revitalizing the industry.

Citing a statement from the CEO of TotalEnergies, Patrick Pouyanne regarding the company’s decision to redirect a $6 billion investment to Angola instead of Nigeria, energy expert and oil and gas lawyer Ayodele Oni highlighted the urgent need for reforms, stating “While the PIA is a step forward, its implementation is still being tested, and Nigeria is still in the process of refining its petroleum policies. Other countries like Brazil, the United States of America, and Angola generally offer more stable, mature regulatory frameworks with clearer fiscal terms. These environments allow IOCs to plan long-term investments.”

On his part, the COO of AIONA and Country Manager of TradeGrid, Jide Pratt pointed out that ongoing divestment deals, like the one between Seplat and ExxonMobil, which remains pending, suggest that the Petroleum Industry Act (PIA) has not sufficiently addressed key issues such as red tape and bureaucracy.

“NUPRC has a major role to play to get things working. 2 examples are the PIA and poor implementation as well as the time it took for The Oando / Agip deal as well as the shell/Exon/Seplat deal still pending. Abandonment issues and signatures issues. All these make it easier to go elsewhere vs Nigeria hence the lack of investment for a decade,”  Pratt said.

Experts have also pointed to the prolonged approval processes for contracts, including divestment deals, investment opportunities, and equity sales, as a major hurdle for the industry.

For instance, Pratt noted that while Executive Order 40 was designed to address these delays, the issue continues to plague the sector.

He argued that, given the current volatility, tax incentives alone may not suffice to attract IOCs to invest in Nigeria.

“Recall that Executive Order 40 tried to address this with contract approvals from regulators, contract limits and tenure to ease the red tape. It’s left to be seen if this has actually been implemented and is working,” Pratt said.

While tax measures could provide a potential boost for deep-water investments, experts agree that Nigeria’s ability to attract these investments ultimately depends on addressing deeper issues like bureaucracy and red tape. Without tackling these persistent challenges, the effectiveness of any financial incentives may be limited.

As Jide Pratt emphasized, “Enough is never enough,” urging the government to take stronger actions to address the root causes behind the exodus of international oil companies and low sector investment.

READ ALSO
Tinubu to Discuss Sustainable Governance at BRICS Summit in Rio
BY Abiodun Saheed Omodara June 29, 2025 0

President Bola Tinubu arrived in Vieux Fort, Saint Lucia, on Saturday for the first leg of his two-p...

READ ALSO
Reps Launches Committee to Review CNG Policy Implementation
BY Abiodun Saheed Omodara June 27, 2025 0

The House of Representatives has formed an ad-hoc committee tasked with examining the Federal Govern...

READ ALSO
Nigeria Takes Bold Step towards Energy Independence with Naira-Based Crude Sales Initiative
BY Abiodun Saheed Omodara June 25, 2025 0

The Nigeria Export Processing Zones Authority, alongside the Federal Government’s One-Stop-Sho...

READ ALSO
IPMAN Links Rising Petrol Prices to Crude Oil Costs and Market Dynamics
BY Abiodun Saheed Omodara June 24, 2025 0

ABUJA, Nigeria (NAN) - The Public Relations Officer of the Independent Petroleum Marketers Associati...

READ ALSO
Tinubu Launches National Mechanised Farming Programme to Tackle Food Insecurity
BY Abiodun Saheed Omodara June 23, 2025 0

In a bid to combat food insecurity and encourage youth participation in farming, President Bola Tinu...

READ ALSO
Oil Prices Surge Amid U.S. Airstrikes on Iran's Nuclear Sites
BY Abiodun Saheed Omodara June 23, 2025 0

Oil prices rose on Monday while the dollar gained strength following the U.S. airstrikes on Iran's n...

READ ALSO
FG Coordinates Evacuation Plans for Citizens in Iran-  Minister
BY Abiodun Saheed Omodara June 22, 2025 0

ABUJA, Nigeria - The Minister of Foreign Affairs, Ambassador Yusuf Tuggar, has refuted false narrati...

READ ALSO
Governors, FG Unite to Tackle Food Security Challenges
BY Abiodun Saheed Omodara June 20, 2025 0

The 36 state governors have come together to collaborate with the Federal Government on harmonizing...

OUR CHANNELS:

Reclaiming Gaddafi’s Pan-African Dream: Why His Vision Still Matters
BY Suleiman Jimoh July 2, 2025 0

Few remember that Muammar Gaddafi once dared to imagine an Africa unchained from foreign dictate. He...


Calls for Autopsy: Ondo Govt. Faces Pressure to Exhume Late Governor Akeredolu's Body
BY Abiodun Saheed Omodara July 1, 2025 0

The Ondo State Government may need to exhume the body of the late governor, Oluwarotimi Akeredolu, f...


Dangote Slash Petrol Price to N840 per Litre Amid Market Adjustments
BY Abiodun Saheed Omodara July 2, 2025 0

The Dangote Petroleum Refinery has lowered the ex-depot price of Premium Motor Spirit, commonly refe...


NEC Reinstates Anyanwu as PDP National Secretary Amid Internal Conflicts
BY Abiodun Saheed Omodara July 1, 2025 0

The 100th meeting of the National Executive Committee (NEC) of the People’s Democratic Party (...


APC Schedules NEC Meeting for July 24 Amid Leadership Changes
BY Abiodun Saheed Omodara July 1, 2025 0

ABUJA, Nigeria - The All Progressives Congress (APC) has scheduled its National Executive Committee...


PDP: Tensions Rise Ahead of 100th NEC Meeting Amid Factional Disputes
BY Abiodun Saheed Omodara July 1, 2025 0

As tensions escalate within the People’s Democratic Party regarding the National Secretary pos...


Sokoto,Kebbi PDP Ready to Join Coalition Against APC in 2027
BY Abiodun Saheed Omodara July 1, 2025 0

The state branches of the People’s Democratic Party (PDP) in Sokoto and Kebbi have expressed t...


UNIUYO Medical Lecturers Begin Indefinite Strike over VC appointment
BY Abiodun Saheed Omodara June 30, 2025 0

Medical lecturers at the University of Uyo, affiliated with the Medical and Dental Consultants Assoc...


Nigeria and Saint Lucia Unite for Mutual Growth
BY Abiodun Saheed Omodara July 1, 2025 0

President Bola Tinubu and Prime Minister Philip J. Pierre agreed on Sunday to establish formal diplo...


Tinubu Empowers ICRC to Streamline PPP Processes
BY Abiodun Saheed Omodara July 2, 2025 0

President Bola Tinubu has authorized the Infrastructure Concession Regulatory Commission (ICRC) to e...


More Articles

Load more...

Menu