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Nigerian Govt says new Petroleum Law is fair to all, and will increase production

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LONDON-The Minister of Petroleum Resources and Chairperson of the Board of Directors of the Nigerian National Petroleum Corporation, NNPC, Mrs. Diezani Alison-Madueke  has described the draft Petroleum Industry Bill recently sent to the National Assembly by President Goodluck Jonathan as a viable document capable of providing a win-win scenario for all stakeholders in the oil and gas industry in Nigeria.
Speaking at a High Level Investment Summit in London organised by the Ministry of Trade and Investment in conjunction with the Bank of Industry, Mrs. Alison-Madueke in a presentation titled: Investment Opportunities in Nigeria’s Downstream Oil and Gas Value Chain, called on investors around the globe to take full advantage of the enormous opportunities the proposed oil industry reform law has to offer.
The Minister noted that apart from providing a healthy deregulated environment for private sector participation in the downstream sector, the PIB offers a refreshing fiscal regime with strong incentives for production.
“We have a fiscal regime by royalty and tax which is now predicated on production as opposed to terrain and investment as was previously done. Royalty by production as we have outlined in the bill will capture the output of company as opposed to its location; it will create a fair balance between small and big operators operating in the same terrain, it will give operators the opportunity to make fair returns during field decline, and it proposes lower rates on condensate from large fields as well as ultra deep water fields,’’ Mrs. Alison-Madueke said.
The Minister explained that the royalty by price ensures a trigger mechanism which provides the existence of fair and balanced pricing which is fair to all irrespective of the terrain of the operator since it comes with a self adjusting
The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke and the Managing Director of Bank of Industry, Ms Evelyn Oputu at the High Level Investment Summit in London

rate based on the price of crude oil and the natural gas price.

She noted that the new bill provides for a robust and efficient tax regime based on CITA (Corporate Income Tax), the Natural Hydrocarbon Tax and Production Bonus based regimes.
On the reported concerns raised by some operators over the proposed increase in government take from 61 to 72 percent in the deep and ultra deep offshore, the Minister stated that in arriving at the figure, Government considered all the variables taking into account the interest of the nation as well as what is obtainable in other jurisdictions across the world.
“The proposed increase of Government to 72 percent is competitive when we look at the scale of other entities around the world like Norway, Indonesia and even Angola. You recall that the 1993 Production Sharing Contract term (PSC) was based on $20 per barrel crude oil prices real time but since the start of production in the PSC fields crude prices have been upwards. So it was very necessary to look at the terms again,” Mrs. Alison-Madueke submitted.
She noted that the new regime offers an avenue for fresh investments due to its incentive for production which is designed to attract extra investment in that regard.
“In all, the proposed Petroleum Industry Bill 2012 comes closest to what we consider a win-win situation for the Nigerian Government, the Nigerian economy and people as well as other stakeholders and potential investors in the oil and gas industry,’’ she stated.
The event which was attended by a large number of would be investors also drew a large number of Nigerians in Diaspora.They include key Nigerian business men, the Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, Minister of Trade and Investment, Olusegun Aganga, Governor of Ekiti State, Kayode Fayemi.


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Oil

FG Introduces New Incentives To Revitalize Nigeria’s Oil & Gas Industry

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In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.

The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.

The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.

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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.

The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.

This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.

These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.

The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.

 

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Tinubu set to approve ExxonMobil-Seplat oil deal, expands CNG bus initiative

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By Yemie Adeoye

NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.

The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.

“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”

The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.

“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.

Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.

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ExxonMobil To Invest $10bn In Nigeria’s Deep-Water Oil Operations

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As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.

Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”

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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.

Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.

We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.

“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.

On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.

 

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