Nigeria moves to keep investment flowing as oil majors slash spending
The Nigerian National Petroleum Corporation has said it is renegotiating commercial contract terms with major oil firms in the country, in a move that it hopes will keep investment flowing into a sector crucial for its economy at a time when spending is being slashed.
Africa’s largest oil exporter and biggest economy relies on the oil sector for half of its budget and 90 per cent of its foreign exchange.
Oil companies, including Royal Dutch Shell, ExxonMobil, Total and Eni, are cutting billions in spending after taking hits to their profits, shifting money to renewable fuels and focusing only on the most cost-effective markets.
The NNPC Group Managing Director, Mele Kyari, said in an interview with Reuters on Friday that new commercial terms were being negotiated and would be finalised before a pending oil overhaul bill is passed.
“No company will invest where they cannot get the appropriate margin. We’re very conscious of the fact that people have choices, companies will make choices to leave countries when they have to,” he said.
Nigeria’s parliament has promised to pass the long-awaited Petroleum Industry Bill by May. It will define the sector for decades to come, but companies have criticised the draft for not doing enough to attract development dollars. They have raised issues over taxation, royalties and local community obligations.
