Federal Govt Jettisons Signature Bonus Regime To Boost Oil Industry Investment

The federal government is yielding more grounds by discarding age long oil and gas contracting policies in a fresh move to boost production.

In a new thinking, Nigeria plans to replace the so-called signature bonuses that companies owe to the government at the signing of contracts with lump sums for production.

The chief executive officer (CEO) of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, dropped this hint while announcing the government’s new policy direction.

Under the new arrangement, Nigeria is moving towards reducing the costs for oil companies willing to sign new production contracts as the government looks to attract firms in its oil and gas industry again, Komolafe said.

Lower costs and tackling delays in licensing would be a “paradigm shift” in the Nigerian oil and gas industry, Komolafe told Bloomberg.

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Companies bidding in the next licensing round, which is expected shortly, will ‘see that Nigeria is ready to do business differently,’ the CEO of the upstream regulatory agency added.

Nigeria has struggled in recent years to boost its oil and gas production and has consistently failed to produce to its quota under the OPEC+ agreement.

The combination of pipeline vandalism and oil theft with a lack of investment in capacity has made Nigeria the biggest laggard in crude oil production in the OPEC+ alliance.

Since President Bola Tinubu took office in May 2023, he has pledged to boost oil and gas production and make the sector attractive for international oil companies again.

Shell sees $6 billion worth of oil and gas investment opportunities in Nigeria.

Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, and the top executives of Shell’s Nigerian unit, Shell Nigeria Plc, held talks in early December with President Tinubu in Abuja.

According to presidential spokesperson, Ajuri Ngelale, Shell has identified a $5 billion investment opportunity in Nigeria’s offshore oil exploration and production and has said it would invest another $1 billion within 10 years to ramp up natural gas production in Nigeria for domestic supplies and exports.