PETROLEUM INDUSTRY REFORM IN NIGERIA: SIMULATION ...

Conclusions
• Ongoing petroleum industry reform legislation in Nigeria has fiscal
instruments and terms that enhance government access to gross revenue
and still makes E&P operations profitable in Nigeria.
• There is a fifty percent likelihood that the legislation will give 78‐79 percent
of total profit from a 100 MMB deepwater oil project to the host
government.
• Justification for this high government take is being tied to high hydrocarbon
prospectivity in Nigeria, but undue fiscal burdens may also disenfranchise
investors as evident in the sensitivity of IRR to selected decision variables.
• If contractors spend low proportion of its expenditures abroad, project
profitability, ceteris paribus, tend to increase
• Allowing all CAPEX to be expensed in NHT and CITA calculations increases
project profitability as expected.
• Deep water profitability is higher for existing operators in deepwater than
new comers because CITA and NHT are allowed to be consolidated rather
than being ringfenced.
OOILEDARE
USAEE 2010, Calgary, Canada
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