Offshore field development projects capable of yielding total production capacity of 1.255 million barrels per day hang in the air as operators wait for the emerging political environment to assume a definite form and cast a stable outlook for investments. The projects which have the remote bases for a spate of fiscal disputes that pitched the industry regulators and policy drivers against investors had either slowed down or completely stalled following sharp disagreements over new operating conditions recommended in the lingering Petroleum Industry Bill (PIB).
Expectedly, the projects listed as awaiting real development activity belong to the five major multinational oil firms that dominate Nigeria’s deepwater operations: Shell, ExxonMobil, Total, Chevron and Eni. Some of them are joint ventures among the multinational partners in production sharing agreement with government through the Nigerian National Petroleum Corporation (NNPC).
Unlike the joint ventures (JVs) in which government is expected to provide about 60 percent of the funds for capital and operating expenditure, production sharing contracts, also called PSCs, excludes government from making funding contributions towards exploration and development programmes but allows the operators who bears all the risks to recoup expenses through production sharing arrangements that prioritize exploration and development cost recovery.
Thus, the fate of the projects rests in the hands of the multinational oil companies that operate the concessions and discovered the reserves that are now due for development and production. But the proposed changes in the fiscal terms and operating conditions had cast gloom on the projects.
Former Shell’s Exploration Chief in Africa, Mr. Ian Craig, had warned that the fiscal disputes could cost the country over $50 billion of investments if the tax intensive fiscal proposals were allowed to sail through but government’s technocrats had contended that the fiscal proposals were internationally competitive and still offered attraction to new investors.
