Oil companies are urging the Federal Government to improve fiscal terms for gas, especially those not associated with oil drilling, as sources close to the government say there is a move to decouple gas from the petroleum ministry.

Operators say the current terms are not attractive for investments because they were designed for an era when Nigeria considered gas as something you found while searching for oil.

Over the last couple of years, the Nigerian government has been ramping up efforts to deepen gas investments. For example, the bulk of the 57 fields awarded to marginal field operators during the 2020 marginal field bid round were offshore and gas extraction seemed to be the intent.

There were 29 offshore fields awarded, amounting to 51 percent of the total fields awarded. Twenty fields were in swamps and only 5 fields were located on land.

Many of these fields have stranded gas which International Oil companies have failed to develop because of the absence of a thriving local gas market.

Oil operators are calling upon the government to improve the fiscal terms for gas. Elohor Aiboni, Managing Director of Nigeria’s leading deep-water oil and gas company, Shell Nigeria Exploration and Production Company (SNEPCo), recently called for better fiscal terms for offshore oil fields to make the country’s oil sector attractive for investment.

In remarks at the recent Nigerian Oil Gas conference in Abuja, she urged the Nigerian government to replicate the Petroleum Industry Act’s (PIA) good fiscal terms for onshore oil projects and to put in place positive fiscal terms for gas projects that are not associated with oil projects.

“The PIA has provided better terms for onshore oil reduction taxes and royalties, but action is still required to enact terms for gas that is not associated with oil drilling,” she said.

Editor