Strong indications have emerged that Nigeria’s oil and gas industry may suffer a major setback this year as some International Oil Companies (IOCs) in the country seem poised to divest their stakes and exit the country for want of favourable sector reforms.
S & P Global Platts, a provider of energy and commodities information headquartered in London, in a recent report disclosed that the much-awaited turnaround in the nation’s oil sector in 2020 looked impossible, considering the potential of President Muhammadu Buhari-led economic model to frustrate efforts to raise oil production in the short term and even beyond.
Mr Buhari had last November taken a drastic measure to increase taxes on companies operating in the nation’s deepwater blocks, a gesture aimed at amassing greater revenue for the government, though the move has the far-reaching implication of putting off International Oil Companies (IOCs) from Nigeria and consequently impeding output growth.
According to the current structure, foreign oil firms account for over 70% of investment in the oil and gas sector in Nigeria, itself Africa’s largest oil producer.
In the same month President Buhari hiked the taxes, California-based global oil giant, Chevron kick-started a divestment process that would sell off its 40% stake in two Nigerian shallow water leases, a move that put further strain on the fragile 116-year old relationship between the firm and the country.
