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Nigeria is reducing the costs for oil companies willing to sign new production contracts as OPEC’s largest African producer looks to attract firms in its oil and gas industry again, the head of the oil regulator told Bloomberg in an interview published on Wednesday.
Nigeria plans to replace the so-called signature bonuses that companies owe to the government at the signing of contracts with lump sums for production, Gbenga Komolafe, chief executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), said.
Lower costs and tackling delays in licensing would be a “paradigm shift” in the Nigerian oil and gas industry, Komolafe told Bloomberg.
Companies bidding in the next licensing round, which is expected shortly, will
“see that Nigeria is ready to do business differently,” the CEO of the upstream regulator added.
Nigeria has struggled in recent years to boost its oil and gas production and has consistently failed to produce to its quota under the OPEC+ agreement. The combination of pipeline vandalism and oil theft with a lack of investment in capacity has made Nigeria the biggest laggard in crude oil production in the OPEC+ alliance.
Since President Bola Tinubu took office in May 2023, he has pledged to boost oil and gas production and make the sector attractive for international oil companies again.
Shell sees $6 billion worth of oil and gas investment opportunities in Nigeria, the country’s presidency said earlier this month, following a meeting of senior executives of the supermajor with Nigerian officials.
Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, and the top executives of Shell’s Nigerian unit, Shell Nigeria PLC, held talks in early December with Nigerian President Tinubu in Abuja.
According to presidential spokesperson Ajuri Ngelale, Shell has identified a $5 billion investment opportunity in Nigeria’s offshore oil exploration and production and has said it would invest another $1 billion within 10 years to ramp up natural gas production in Nigeria for domestic supplies and exports.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com