Multinational energy giant, TotalEnergies outlined five key proposals on Tuesday to help revive Nigeria’s oil and gas sector, which has been struggling with underinvestment, stagnation, and declining production for over a decade.
The company emphasized the need for more attractive investor entry costs and market-reflective signature bonuses for oil block bids.
Additionally, TotalEnergies called for clarification on the Nigerian National Petroleum Company Limited’s “back in right” before transferring assets to new leaseholders and operators.
TotalEnergies also proposed that the government re-license all unexplored or expired oil and gas blocks to new holders and activate the “Drill or Drop” clause under the Petroleum Industry Act.
This would discourage companies from holding onto assets for extended periods without developing them.
These suggestions were put forward by the Chairman of TotalEnergies Companies in Nigeria and Managing Director of TotalEnergies EP Nigeria Limited, Mr. Matthieu Bouyer, during a management session at the ongoing 42nd annual conference and exhibition of the Nigerian Association of Petroleum Explorationists in Lagos.
Represented by the company’s Executive Director of Corporate Services, Mr. Olatunji Akinkumi, Bouyer highlighted that Nigeria has been making strides to enhance competitiveness through progressive changes in its energy landscape in recent years.
He recognized the government’s efforts to rejuvenate Nigeria’s oil and gas upstream sector, including the enactment of the Petroleum Industry Act (PIA), which brought greater certainty, as well as the introduction of Presidential Executive Orders and tax incentives.
However, the TotalEnergies boss noted that, despite these important steps, there are still areas that need further improvement and additional action.
“The first is to have more attractive entry cost and conditions for exploration in new blocks. We urge the provision of market reflective signature bonuses and the consideration of introduction of a ‘drill or drop’ clause in exploration phase in this new blocks.
“The second area is access to expired deepwater blocks. We expect the encouragement or facilitation in unexplored but expired deepwater blocks through creation of strategic partnerships within the industry”, he stated.
He also called on the federal government to clearly define the terms of the NNPC’s “back-in right” before licensing rounds and asset leasing.
He proposed that the back-in right should be cash-funded and limited to a strategic minimum holding.
A “back-in right” in the oil and gas industry allows the original owner of a lease to regain a portion of the profits after the new owner has recovered their costs.
“The third one is government or NNPC ‘back in right’. Government should confirm the terms of the back in rights clearly prior to licensing round and leasing of assets. The back in right should be cash-funded and reduce most probably, to a strategic minimum holding.
“The fourth aspect is on security of assets and infrastructure. We encourage the development of a robust strategy for host communities to be part owners of energy infrastructure, which will serve as motivation to cooperate more with government and other stakeholders on asset security,” he added.
