Nigeria woos oil firms with lower costs in bid to boost output

Nigeria is introducing incentives to attract oil and gas investment as Africa’s biggest economy works to ramp up crude output.

The measures include substituting signature bonuses — the payments made by companies to governments upon signing contracts — with lump sums for production, Nigerian Upstream Petroleum Regulatory Commission Chief Executive Officer Gbenga Komolafe said in an interview. The country is also tackling delays in licensing.

Nigeria’s beleaguered oil industry has been a drag on the economy, with the country unable to meet OPEC+ quotas amid supply disruptions, crude theft and vandalism. Since taking office in May, President Bola Tinubu has initiated sweeping reforms to revive economic growth, and a recovery of the energy sector is vital to achieve the double-digit expansion he’s targeting.

Reducing costs for contractors and addressing the issues that hold up production agreements represent a “paradigm shift,” Komolafe said. In the next bidding round, happening “very soon,” potential investors will “see that Nigeria is ready to do business differently.”

Tinubu has pledged to increase oil output — currently around 1.4 million barrels a day — to 4 million a day by 2030 – an aspiration many analysts believe to be implausible. Boosting production is not only a question of cutting red tape. Nigeria has seen an exodus of oil majors in recent years, with firms selling onshore and shallow-water assets after projects were plagued by pipeline sabotage.

The government is working to upgrade infrastructure, end theft and vandalism and improve community relations, according to Komolafe, who said capital inflows into the industry had dropped by about 74% in almost a decade.