Experts in the energy sector have stressed that enhanced investment is crucial to the growth of the Nigerian oil and gas industry. They spoke during the Kenna Partners Energy Dialogue held in Lagos at the weekend.
The event featured key industry players and government officials to discuss the challenges confronting the sector and chart the path forward. Leading the discourse, Director of Upstream at the Ministry of Petroleum Resources, Kamoru Busari, representing the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, stated that the ministry is aware of the funding challenges confronting the global energy sector and working to create an enabling environment to attract investment.
“When we observed the global energy transition and defunding of oil and gas projects, we started a dialogue with other oil-producing African countries to start our bank to fund our projects to not be frustrated by following the Western transition plan.
“This led to the creation of the $ 5 billion African Energy Bank by the African Petroleum Producers’ Organisation, which is now hosted by Nigeria,” Busari stated.
Head of the National Oil and Gas Excellence Centre, Victor Otobo, representing the Commission Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, reiterated the Commission’s commitment to creating an enabling regulatory environment that fosters divestment and reinvestment in the industry.
“The first step to divesting interest in an asset awarded by the Federal Government is to send a notification of divestment following which the company sends an application stating how they intend to divest.
“The Commission then conducts its due diligence to ensure the assets are without encumbrances and free of any potential transfer of liabilities. We then ascertain the abandonment and decommissioning plan before preparing a report for Ministerial Consent,” Otobo remarked.
He explained how the Commission has granted 42 licenses for deep offshore development over 30 years but only 6 have been developed so far, citing funding constraints and technology as the major impediments to deep offshore development.
Otobo noted that the Commission has, therefore, streamlined the tax regime, removed the bottlenecks, and provided clarity to potential investors to encourage investments.
The taxes, he noted, have been streamlined by the Petroleum Industry Act, to just the Hydrocarbon Tax and Royalties, effectively doing away with the Petroleum Profit Tax and reducing the tax burden on operators.
On his part, the Senior Partner at Kenna Partners and Senior Advocate of Nigeria, Professor Fabian Ajogwu, called for a deeper introspection into the energy sector given that international oil companies (IOCs) are divesting in Nigeria but re-investing in other African countries.
“Security challenges, host community issues, and cost per return could be part of the reasons behind the divestments, which necessitates the indigenous operators acquiring the assets to develop comprehensive strategies that address these issues. New assignees must do their due diligence and have a plan to engage properly with the host communities, a plan to operate a leaner model, and a plan to address security concerns,” Ajogwu opined.
Source: Guardian
