… says good fiscal incentives, competition will drive costs down

…as deep-water segment in Nigeria stuck for 10 years

Oredola Adeola

Mr. Mathieu Bouyer, Country Chairman, and Chief Executive Officer of TotalEnergies EP Nigeria Limited, has stated that despite the Presidential Executive Orders on Oil and Gas development issued by President Tinubu, high operating costs, unhealthy competition in regional markets, a shortage of contractors and other factors will continue to hinder potential investments in Nigeria’s deep-water oil and gas industry.

The CEO of TotalEnergies EP Nigeria Limited in his remark, while speaking during a session titled: “Defining the Outlook for Deep-Water Exploration and Production in Nigeria”, at the just concluded 23rd Nigeria Oil and Gas (NOG) Energy Week held in Abuja.

According to him, there is a need for competition to drive the costs down.

He said, “Even with the fiscal incentives, if the costs are too high, investment will not be possible, therefore, there is a need for competition to drive the costs down.

Bouyer, while commending President Bola Tinubu for the Presidential Executive Orders on Oil and Gas Development, issued in March, being implemented through the Special Adviser to the President on Energy, Olu Verheijen, and NUPRC.

He has therefore suggested that deliberate policy directives must be taken to ensure good fiscal incentives and healthy competition that will drive operating costs of production down.

He recalled that the Service Level Agreement (SLA) signed in September 2023 between NNPC and the international oil companies (IOCs) on the 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.

He further stressed that the deep-water segment of the oil and gas industry in Nigeria has been stuck for 10 years since the Egina Final Investment Decision (FID).

He listed other factors limiting investment in the oil and gas sector, including an increase in levies, changes in fiscal terms, lack of contractors, competition in regional markets, and comparatively high operating costs behind the development.

According to him, many contractors have left the country and that has increased the lack of competition in the sector.

He said there was a need for the Federal Government to understand why they left and put some measures in place to bring them back.

“As Capex is capped, arbitration is made. So, it’s important to be competitive and agile to accommodate requirements,’’ he said.

Bouyer pointed out that Nigeria was gifted with a lot of oil and gas resources, saying the country has a 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 transfer 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 the 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.

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.”

Bouyer added, “Each company capable of working 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.”

The TotalEnergies’ CEO therefore emphasized the need for competitiveness and agility to attract investment, stating that resources would not disappear but might be delayed if the current challenges are not addressed