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Content policy stifles new deepwater projects
By Bassey Udo
November 16, 2010 11:51PM

International oil companies (IOCs) operating in the country have criticised government's implementation of the Nigerian Content Development (NCD), saying imposition of the policy is stifling both the number and the pace of developing new deepwater oil projects.

Mark Ward, Lead Country Manager, ExxonMobil Companies in Nigeria, voiced their concern yesterday in a session on Nigerian Content Development (NCD) at the ongoing conference of the Nigerian Association of Petroleum Explorationists (NAPE) in Abuja.

Mr. Ward said though Nigerian Content Development was important, there was need to strike a balance between its objectives and efficient project development processes to sustain activity continuity.

"Nigerian Content Development needs to be paced, realistic, and collaborative. Imposition could stifle both the total number of in-country projects and projects development pace," he said, adding that "significant improvements are also needed to address the protracted permitting and approval process to reduce cycle time, which will lead to improved project value."

Multiple approval system

Under the provisions of the proposed Petroleum Industry Bill (PIB) currently pending before the National Assembly for legislation, a new midstream and downstream project approval and licencing system has been introduced to handle approvals for investments in those sectors of the industry.

The new system is in addition to the existing arrangement requiring all joint venture exploration and production companies to get approvals from the National Petroleum Investments Management Services (NAPIMS) and the Department Petroleum Resources (DPR) before embarking on projects in the country's petroleum industry.

Besides, multi-national companies handling jobs that require the use of expatriates are expected to get the approval of the Nigerian Content Development and Monitoring Board (NCDMB) before engaging such personnel to execute jobs in the industry.

Under the new policy, affected companies are to mandatorily give the right-of-first-refusal to Nigerians by advertising the offer of such positions in Nigerian and international media. The jobs can only be given to non-Nigerians only if at the end of the publications, no qualified Nigerian was found with the relevant competence and expertise to handle them in-country.

Huge undeveloped potentials

Other participants at the conference stressed the need to ensure that implementation of the NCD policy facilitated the process to initiate fresh projects to take up the approximately 22 billion barrels of oil equivalent currently being associated with the West Africa deepwater development.

Current estimates show potentials of about three billion barrels of oil as undeveloped, with about 19 billion barrels of oil equivalent as undiscovered, while a combined developed and undeveloped gas resources stand at about six billion barrels of oil equivalent, or 35 trillion cubic feet (TCF), with a sizable proportion of the potentials located in Nigeria.On challenges in Nigeria's deepwater development, Mr. Ward observed that though Nigeria and Angola began licencing of deepwater oil concessions at the same time in early 1990s, the tough fiscal terms to operators by the government between 2000 and 2005 had rendered exploration for oil unattractive, resulting in the decline in the rate of field development activities.

http://234next.com/csp/cms/sites/Next/Money/5643190-147/content_policy_stifles_new_deepwater_projects.csp