Nigeria woo big IOCs with incentives to local crude production in 2024

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Nigeria is implementing incentives to attract investments in its oil and gas sector, a crucial move for Africa’s largest economy aiming to increase crude output.

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The initiatives include replacing signature bonuses, paid by companies to governments when signing contracts, with lump sums tied to production, as revealed by Gbenga Komolafe, CEO of the Nigerian Upstream Petroleum Regulatory Commission. Additionally, measures are being taken to address licensing delays, a significant hindrance to the country’s oil industry.

President Bola Tinubu, who assumed office in May, has undertaken substantial reforms to revive economic growth. The recovery of the energy sector is pivotal to achieving the ambitious double-digit expansion goals set by the president.

Reducing costs for contractors and resolving issues that impede production agreements marks a noteworthy shift, signaling to potential investors in the upcoming bidding round that Nigeria is poised to conduct business differently.

Tinubu aims to raise current oil output, standing at approximately 1.4 million barrels per day, to 4 million barrels per day by 2030—an aspiration viewed skeptically by many analysts. Beyond bureaucratic streamlining, Nigeria faces challenges stemming from the departure of major oil companies in recent years, prompted by issues like pipeline sabotage.

To address this, the government is focused on infrastructure upgrades, curbing theft and vandalism, and enhancing community relations. Komolafe notes a substantial decline of about 74% in capital inflows into the industry over nearly a decade, highlighting the urgency of revitalizing the oil sector.

Assistance provided by Bill Lehane underscores the significance of these initiatives in reshaping Nigeria’s oil and gas landscape.

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