Current oil prices below $50 has made more than two out of three investment projects on the African continent non-viable.

While final investment decisions (FID) have been made on less than 10 percent of the 48 billion barrels of oil equivalent discovered in the past decade, governments haven’t adapted to the new environment, Martin Kelly, director for sub-Saharan Africa research at consultancy Wood Mackenzie, said in an interview at the Africa Oil Week conference. That means some nations including Nigeria, the continent’s biggest producer, are proposing increasing royalties at a moment the industry can least bear it.

Nigeria has proposed increasing the government’s share of profits and plans to review offshore contracts signed with oil companies two decades ago. The last draft of a proposed petroleum law, stalled in parliament for the past seven years, seeks to raise offshore taxes to 73 percent and those for onshore to 87 percent from 50 percent and 83 percent respectively.

Exploration drilling in Nigeria is close to the lowest in more than a decade because of shelved investment plans, according to the Petroleum Resources Ministry.

With oil currently below $50 a barrel, only a third of $270 billion of potential investment projects in Africa make economic sense, according to Obo Idornigie, principal analyst at Wood Mackenzie.

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