POOR doing business environment is costing Nigeria billions of dollars as oil and gas companies exit the country for other African nations with better investment climates.
On December 19, 2023, TotalEnergies Global Chief Executive Officer, Mr. Patrick Pouyanne, visited the State House, Abuja, sounding quite optimistic.
He described Nigeria as “very important for Total Energies,” as the country accounted for eight to 10 percent of the company’s total production and over 18 percent of its global investment.
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He said, “Mr. President, we are ready to invest $6 billion in the coming years. We are looking extensively at more deepwater production and gas production opportunities across the terrain. We welcome your policies and your personal commitment to ensuring that all required fiscal incentives are provided while security issues are tackled. Everything is here. We just need to conclude with the tweaks and changes necessary to unlock the outstanding potential in both oil and gas.”
An excited President Bola Tinubu gave some promises to the TotalEnergies’ Global CEO and his team.
Mr Tinubu said his government would “review troublesome areas, fiscally and otherwise, to incentivize gas production in the age of transition to cleaner energy.”
He further promised that “we are ready to make a difference as a government,” noting that “the good handshake that we have is for partnership and to accelerate and incentivize gas production in pursuit of the energy transition.”
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Five months make a lot of difference
Five months after, however, a lot seems to have changed. At the Africa CEO held in the second week of May 2024 in Kigali, Rwanda, Mr Pouyanne said his group was no longer interested in investing in Nigeria owing to policy inconsistencies, flagging the investment climate of the Niger Delta region.
“Nigeria loves to open topics without closing them. You love to debate,” he said, as reported by Nairametrics.
“There is always a new legislature in Nigeria about a new petroleum law. When you have such permanent debates, it’s difficult for investors looking for long-term structures to know what direction to go,” he said in a statement that has rattled Nigerian policy makers.
“In reality, the Niger Delta is the most prolific part of West Africa. But if you look at what happened, because of these debates, there has not been a single exploration in Nigeria for 12 years. It’s important to have a debate and then settle it and put a framework on the table that investors can trust.
“We have countries that have perfectly integrated policies like Angola. So, we go to Angola and announced a very large $6 billion projects in the beginning of the week because there. their framework is stable,” Pouyanne said.
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By implication, the $6 billon investment has been diverted to another nation by the man who had earlier made the announcement.
São Tomé and Príncipe eats Nigeria’s lunch
Brazilian oil giant, Petrobas, exited Nigeria in 2020, selling its shares to Canada’s Africa Oil Corp. for $1.45 billion.
In 2023, Petrobras made its return to Africa but, this time, ignoring Nigeria for São Tomé and Príncipe.
The state-owned oil giant entered into an agreement with the island country for three offshore blocks, as part of a consortium with British multinational, Shell.
Representatives of Shell, Petrobras and ANP-STP were in the capital of São Tomé to sign the deal, witnessed by Infrastructure and Natural Resources Minister of the country, José Rio. The assets were previously owned by Shell, but Petrobras acquired 45 percent stakes in two of the blocks and a 25 percent ownership in the third one.
Petrobas is likely to spend $1.3 billion in the island nation, according to those knowledgeable about the matter.
Its assets are estimated at $185 billion, with a 2023 revenue of $124.2 billionand profits of $37 billion.
Burning issues
There are several critical issues hurting oil and gas investors in Nigeria. Oil theft and pipeline attacks are rife in the Niger Delta. According to the Nigerian Extractive Industries Transparency Initiative (NEITI), Nigeria lost N16 trillion to oil theft in 11 years.
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Constant demands by youths, kidnapping and production disruptions by communities are human-made issues hurting oil and gas exploration in Africa’s biggest oil producer.
“The attitude of our people is chasing away investors. Apart from government policies, oil theft and communities are disrupting operations of oil companies. International oil companies (IOCs) can’t cope with uncertainties inherent in them and so they leave or avoid Nigeria,” said economist and oil and gas analyst, Mr Kelvin Emmanuel.
An investment analyst, Dr Bose Adeboye, said the issues confronting the oil and gas sector are not different from the bigger issues of doing business in Nigeria.
“We need to be more serious if we want to attract investors. Communities and youths see investors as automated teller machines (ATM) and make demands that do not make sense. The government must always step in, but we need attitudinal change in Nigeria,” she added.
