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FG’s fiscal terms on deep sea exploration can’t pull foreign investors—Report

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A new report by the Nigerian Natural Resource Charter (NNRC) has raised an issue of urgent national importance if the nation must attract deep pocket investors in the deep sea oil sub-sector of the economy.

According to the report, the existing terms in the Nigeria’s oil and gas sector are not strong enough to attract investors into the country, saying “On fiscal terms, the regime is not strong enough to attract investors, as compared with other African countries especially in the area of deep sea exploration. The fiscal regime in the sector is not flexible enough to respond to dynamic levels of production and profitability.”

The report took its findings from its 2017 Benchmarking Exercise for Nigeria’s oil and gas industry to observe that “Although a fiscal framework existed in the industry, its ability to generate the required revenues had proved inadequate and unworkable”.

Explaining issues, the Programme Coordinator of NNRC, Tengi George-Ikoli, said “It is expected that the report would be presented and made available to the public and stakeholders in the oil and gas sector by the first quarter of 2018. The conclusions reached in this report highlight the main strengths and weaknesses of Nigeria’s petroleum sector governance, including reform priorities and opportunities.”

Apart from issues bordering on fiscal terms and conditions which discourage prospective investors in the deep sea exploration segment of the oil and gas sector, NNRC report disclosed that another key discouraging factor for both local and foreign investors is the level of inter-agency coordination in the oil and gas sector which it described as being very poor.

NNRC noted further that “As a result, the strategic measures to enhance the oil and gas sector’s operational effectiveness are not well coordinated”.

Continuing, the report added that gaps existing in the institutional and legal framework created critical operational problems for actors in the oil and gas sector, as it stressed that of particular concern was the allocation of oil wells without regard to best practices.

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