NIGERIA Invest in 2012-13 - Newsdesk Media

oil, gas and minerals 77
The decision of the major oil companies to focus on
the deepwater has left a gap for others to look at smaller
shallow-water fields and onshore fields
good. It was to the deepwater that international oil
companies were most attracted around the turn of the
millennium, when some of the world’s biggest finds were
made, because these oilfields were relatively secure and far
from the potentially violent onshore environment.
Analysts Wood Mackenzie found that the current terms of
the bill were “favourable, compared to many other deepwater
regimes, reflecting their vintage”. These terms were drawn up
before the spate of successful finds, and the oil companies
were favoured in return for their willingness to spend on what
was then considered risky exploration.
The NNPC claims that the government take stands at
42 per cent, compared to a global average of 75 per cent. It
says that West African rival Angola has a take of 78 per cent,
while under the PIB it would be 70 per cent in Nigeria.
Shallow-water and onshore opportunities
The amnesty that has brought relative peace to the Niger
Delta has seen a renewed interest in Nigerian onshore
oil, although there is still lingering uncertainty until
a new fiscal system is finalised.
Nigeria’s minister of petroleum, Diezani Alison-Madueke, speaks
at the Organisation of Petroleum Exporting Countries conference
Years of widespread unrest and violence in the region
largely came to an end in 2009, when the government decided
that a military solution was not working and offered an
amnesty that has been taken up by around 26,000 militants.
Those who handed in their weapons were pardoned and
offered vocational training in Nigeria or overseas. They are paid
$410 per month until they find work – a large sum in a country
where gross national average income was $95 per month
in 2009, according to UNICEF.
While there is a constant fear that violence could
resume, the major oil companies that operate most of the
onshore acreage have been able to restart oil production.
This has seen national output rise back to around 2.2 million
barrels a day (b/d) from as low as 1.6 million b/d as militant
action forced shutdowns.
However, the big oil firms are still extremely cautious
about the onshore business. Their decision to focus on the
deepwater has left a gap for others to look at smaller
shallow-water fields and onshore fields. A host of domestic and
foreign companies are very willing to put up with the fiscal
uncertainty and the vagaries of the system in order to
try to win the rights to any available acreage.
With the government saying that Nigerian independent
operators should be given first consideration in the 2010
Nigerian Oil and Gas Industry Content Development Act
(NOGICDA), joint ventures between indigenous companies
backed by foreign investment are becoming more popular,
although several large Nigerian companies – such as Oando
and Conoil – are also at the forefront of the renewed vigour.
Domestic firms seek to grow
One company that has cleverly expanded in recent years,
but decided that the prices were too high, was Nigeria’s
Seven Energy. In 2010, it entered into a strategic alliance
with NNPC exploration and production subsidiary
Nigerian Petroleum Development Company (NPDC)
to provide funding and technical services for the
development of three blocks.
invest in nigeria 2012-13