Poor fiscal regimes disincentive to Nigeria’s deepwater gas production

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Lagos Nigeria, March 12, 2017, (Naija247news) Poor fiscal terms are hindering deep-water blocks owned by international oil companies (IOCs) from optimizing gas production, the Chief Executive Officer, First Exploration and Production Company Limited, Dr. Saka Matemilola, has said.

According to him, the gas terms are more favourable to those producing onshore than those in the deepwater where oil firms such as Shell, ExxonMobil and Chevron operate. M

He said IOCs moved to deepwater because they thought it would be more profitable to do so, adding that the IOCs were not finding things easy.

Matemilola said the issue was making stakeholders in the value chain to ask for more government participation in the sector.

He said: “For some time, the industry has been clamouring for the provision of better gas terms, especially to ease the burdens of operation on the oil majors. Beyond the issue of better gas terms, is the issue of economics, which stakeholders including the government must take into consideration to achieve the desired results in the sector.”

Matemilola, also the Chairman, Society of Petroleum Engineers (SPE) Nigerian Council, urged the government and other stakeholders to adopt a private model when it =comes to pricing and sale of gas.

He said: A willing buyer and a willing seller agreement must be in place to meet the needs of operators in the industry.”

According to him, when a gas company is forced by the Federal government to sell at a particular rate, the firm would not achieve its economic goal, noting that bigger and smaller companies are in the industry and that it would not augur well if all the firms were forced to buy gas at a uniform price.

He urged the Federal Government to handle the agreement on associated gas with caution to avoid crisis in the industry.

According to him, the government is planning to jettison the agreement, advising that the government think about it well before taking a decision on the issue.

He said the government needed to consider a likely replacement for the agreement since it would not pay all the stakeholders.

He added: :I understand that the Federal Government is saying that associated gas agreement would favour companies that have oil and gas but how about the companies that have only gas, which implies that they do not have oil to net off?

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