By Charles Kennedy
The new government of Muhammadu Buhari is scrambling to find ways to plug budget holes. Between July 2014 and September 2015, receipts for the state-owned National Nigerian Petroleum Corporation (NNPC) from selling oil dropped by two-thirds.
Buhari’s government has said it is
interested in renegotiating contracts with oil majors, with some of the
contracts dating back to the 1990s. The intention is to tweak the terms in
order to boost the government’s take.
There are several majors operating inNigeria , including ExxonMobil,
Chevron, Eni, and most importantly, Royal Dutch Shell. Shell has been operating
in Nigeria
for decades. On October 5, Shell announced that it had started up the third phase of its
offshore Bonga facility, which will have peak production of 50,000 barrels per
day.
But a change in the terms of the production-sharing contracts could slow or derail investment in new ventures. The FT reports that there are eight offshore projects, which could add a combined 1 million barrels per day in new production by 2020, that could be deferred because of both low oil prices as well as the uncertain regulatory environment. Shell has already put off its final investment decision on another expansion of the Bonga South West.
In response to the possibility of changing the contracts, an executive from one of the international oil majors reportedly said to the FT: “Don’t mess with the fiscal terms.”
International companies are already slashing spending on new projects as they try to shore up their balance sheets. But the unfolding drama inNigeria
represents a new challenge. Oil-producing countries are also struggling, so
battles over how to slice up the revenues from oil fields could proliferate.
By Charles Kennedy of Oilprice.com
There are several majors operating in
But a change in the terms of the production-sharing contracts could slow or derail investment in new ventures. The FT reports that there are eight offshore projects, which could add a combined 1 million barrels per day in new production by 2020, that could be deferred because of both low oil prices as well as the uncertain regulatory environment. Shell has already put off its final investment decision on another expansion of the Bonga South West.
In response to the possibility of changing the contracts, an executive from one of the international oil majors reportedly said to the FT: “Don’t mess with the fiscal terms.”
International companies are already slashing spending on new projects as they try to shore up their balance sheets. But the unfolding drama in
By Charles Kennedy of Oilprice.com
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