Accelerated Divestment and Deepwater Asset Utilization Crucial for Resolving Nigeria’s Oil Challenges
Nigeria’s oil sector is poised for transformation through accelerated divestment processes and the unlocking of deepwater assets, according to industry leaders at the NOG Energy Week in Abuja.
Abdulrazaq Isa, chairman of the Independent Petroleum Producers Group (IPPG), emphasized the urgent need for quicker approval of divestment transactions involving international oil companies (IOCs) like Seplat, the Renaissance Consortium, and Oando. These transactions, he believes, can yield significant daily oil and gas production increases in the short term, with long-term projections aiming for substantial output expansions.
Isa highlighted the potential of unlocking deepwater assets, particularly in negotiating competitive fiscal regimes with major players like Shell, Total Energies, ExxonMobil, and Chevron. Such developments could lead to an additional 700,000 barrels per day of oil production in the near future, positioning Nigeria to tap into one of the world’s largest untapped deepwater resource bases.
In addition to enhancing production capabilities, Isa stressed the importance of sustaining Nigeria’s domestic refining and petrochemical capacities using locally sourced crude oil and gas. This strategy aims to transform Nigeria into a net exporter of refined petroleum and petrochemical products, thus laying a solid foundation for industrial growth.
Isa further underscored the crucial role of expanding domestic gas utilization, focusing on initiatives like Gas-to-Power and supporting gas-based industries. Addressing the current gas infrastructure deficit, he emphasized, is essential for maximizing Nigeria’s abundant gas resources to their full economic potential.
Meanwhile, Olisa Agbakoba, senior partner at Olisa Agbakoba Legal, highlighted significant revenue losses due to tax avoidance practices within the oil and gas sector, estimating an annual loss of N3 trillion. He criticized the lack of tax collection from oil rig companies by the Nigerian Maritime Administration and Safety Agency (NIMASA), underscoring the impact on government revenue streams and public service funding.
Agbakoba called for strengthened regulatory measures and technological enhancements at NIMASA to improve tax collection efficiency from oil rig operations. He advocated for stricter penalties for tax avoidance and emphasized the need for comprehensive audits to identify and rectify tax leakages effectively.
To enhance operational transparency and efficiency within Nigeria’s oil and gas sector, Agbakoba recommended completing the privatisation of the Nigerian National Petroleum Company (NNPC) Limited and clarifying regulatory roles to reduce overlap. He urged full implementation of the Petroleum Industry Act (PIA) 2021 to foster increased revenue generation and industry transparency.
By adopting these measures, Agbakoba believes Nigeria could potentially boost its oil and gas revenue by 30-40% within the next decade, contributing significantly to economic growth and development.
