• Thursday, July 18, 2024
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Why Nigeria’s deepwater investment stalled for 10 years – TotalEnergies

Chappal acquires TotalEnergies’ stake in Nigeria’s oil assets for $860m

Investment in Nigeria’s deep-water oil fields has stagnated for the past decade, according to the Managing Director of TotalEnergies, a major player in the country’s oil sector.

Speaking at the 23rd Nigeria Oil and Gas (NOG) conference in Abuja, Bouyer attributed the stagnation to increased levies, the exit of contractors, and high production costs, which have hampered new developments since the Egina Final Investment Decision (FID).

The Egina oilfield, one of TotalEnergies’ most ambitious ultradeep offshore projects, is located approximately 130 km off Nigeria’s coast at a water depth of over 1,500 meters. Development of the $16 billion field began in 2013, with production commencing in 2019. At peak production, Egina is projected to produce around 200,000 barrels of oil daily.

Bouyer, who also serves as country chairman of TotalEnergies Nigeria, pointed to high operating costs and a lack of competition due to the departure of many contractors as primary factors hindering investment.

Read also: Nigeria’s GDP risks $30bn loss on fossil fuels divestment — Afreximbank

“Increased levies, changes in fiscal terms, and regional market competition have created significant obstacles,” Bouyer explained. “Many contractors have left Nigeria, further reducing competition and driving up costs.”

To revitalise the deep-water sector, Bouyer called on the Federal Government to investigate the reasons behind the contractors’ departure and implement measures to attract them back. “Even with fiscal incentives, if costs remain high, investment will not be feasible,” he said. “We need competition to lower costs.”

He also stressed the importance of being competitive and agile in accommodating requirements. “As Capex is capped, arbitration is made necessary. Stringent measures are crucial to facilitate investment in the deep-water sector.”

Mele Kyari, group chief executive officer of NNPC, had earlier confirmed that Nigeria has only received 3 per cent of Africa’s energy investment over the past decade, despite being the continent’s largest oil producer. This lack of attention to offshore oil and gas projects has hindered the development of a framework to attract investment.

Bouyer’s remarks underscore the need for continuous efforts to improve Nigeria’s investment climate, particularly in the deep-water oil and gas sector.