The International Energy Agency, IEA, has observed that the introduction of new taxes on deepwater projects by the Nigerian government is discouraging oil and gas investors.
The agency in its latest report entitled ‘Oil 2021: Analysis and forecast to 2026’, stated that the global collapse in oil prices was also a disincentive to investments.
“As other producers in Africa seek to improve commercial terms, Nigeria plans to raise taxes on its deepwater oil production, which will make investments less attractive,” the report stated.
“The oil price collapse, in addition to an increase in deepwater government royalties, may prompt IOCs (international oil companies) to review projects.”
It predicted that crude oil capacity in Nigeria would drop by 200,000 barrels to 1.6 million barrels per day by 2026 as a result of low investment.
The EIA said, “With the notable exception of Libya, capacity in most African OPEC+ members is set to slide as producers struggle to attract enough investment to stem declines.
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“In Nigeria, crude oil capacity declines from 1.8 million bpd in 2020 to 1.6 million bpd by 2026 due to underinvestment.
According to the agency, the supply cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies reduced Nigeria’s crude oil production to 1.5 million bpd in 2020, the lowest level since 2016.
It said, “The oil price collapse, in addition to an increase in deepwater government royalties, may prompt IOCs (international oil companies) to review projects. Total reportedly has pushed back development of the 70,000 bp/.
“The oil price collapse, in addition to an increase in deepwater government royalties, may prompt IOCs (international oil companies) to review projects. Preowei field and is seeking to sell its 12.5 per cent stake in deep water OML 118, which includes the Bonga field.
“Output from the block is expected to rise whenever the Shell-operated Bonga Southwest project gets off the drawing board.”
