DEEP WATER PROJECT: TOTALENERGIES SAYS GOOD FISCAL INCENTIVES, COMPETITION ‘LL DRIVE COST’S DOWN
…..As deep water segment in Nigeria stuck for 10 years
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In a bid to move the deep water projects of the Nigerian oil and gas sector forward , Country Chairman and Chief Executive Officer of TotalEnergies EP Nigeria Limited, Mr. Mathieu Bouyer has called on the federal government to ensure good fiscal incentives and healthy competition that will drive operating costs of production down
Stressing that the deep water segment of oil and gas industry in Nigeria has been stuck for 10 years since the Egina Final Investment Decision (FID).
Bouyer made this known at the ongoing 23rd Nigeria Oil and Gas (NOG) conference, themed, “Showcasing Opportunities, Driving Investment, Meeting Energy Demand’’.
Speaking in a session titled: “Defining The Outlook For Deep-Water Exploration and Production in Nigeria”, blamed the gap on high operating costs and lack of contractors and competition in Nigeria.
He listed increase in levies, changes in fiscal terms, lack of contractors, competition in regional markets and comparatively high operating cost reasoned behind the development.
According to him, many contractors had left the country and that has increased the lack of competition in the sector. He said there was need for the Federal Government to understand why they left and put some measures in place to bring them back.
“Even with the fiscal incentives, if the costs are too high, investment will not be possible, therefore, there is need for competition to drive the costs down. “As Capex are capped, arbitration are made. So it’s important to be competitive and agile to accommodate requirements,’’ he said.
Bouyer, recalled that the Service Level Agreement (SLA) signed in September 2023 between NNPC and the international oil companies (IOCs) on contracting process SLA signed proved to be efficient on the Ubeta development project.
TotalEnergies and NNPC recently signed the Final Investment Decision (FID) on the Ubeta project, marking the first of such FIDs after the Presidential Executive Orders on Oil and Gas development.
Bouyer pointed out that Nigeria was gifted with a lot of oil and gas resources, saying the country has large deep-water industry with large resources developed and yet to be developed.
He stated that TotalEnergies was a large operator in Nigeria’s deepwater space, with Egina and Akpo, and developed Usan for transfers operatorship.
He maintained that all significant deepwater projects were developed with past contractual and fiscal conditions, noting that the deepwater segment in Nigeria has been stuck for 10 years since the FID on Egina project.
On what was needed to move the Nigerian deepwater industry forward, Bouyer advised the federal government to replicate similar fiscal terms provided for Non-Associated Gas (NAG) development.
He acknowledged the recent policy reforms of the government, particularly the executive order issued in March, being implemented through the Special Adviser to the President on Energy, Olu Verheijen, and NUPRC.
The TotalEnergies’ CEO stated that owing to the executive order, the company and its partners managed to sanction the Ubeta project in June.
According to him, “It shows that when a sound measure is taken, investment comes.”
He added, “Today, each company capable to work in deepwater is benchmarking these opportunities versus portfolio alternatives. So it’s important to be competitive and agile to accommodate requirements. Resources will not disappear; they are here but they will be pushed to a later stage while the country needs them now.”
