Angola reaps oil reform benefits as Nigeria fiddles with PIGB

Angola reaps oil reform benefits as Nigeria fiddles with PIGB

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Angola and Nigeria, two of Africa’s biggest oil producing countries need foreign direct investments to grow their oil and gas industry but whilst one is going ahead with significant reforms and pulling in investors, the other drags along.

With its upcoming marginal field bidding round, on-going licensing of several blocks from this year onward, and numerous opportunities across the gas value-chain, Angola has become one of the most attractive and lucrative markets for oil investors on the continent.

Production levels in Angola are expected to soar by 2020 following the country’s restructuring, including the reorganisation of the state oil company Sonangol. This adds to a drastic revision of Angola’s legislation related to oil and gas. The government is determined to spur growth in the sector, encourage exploration in development areas, improve operation efficiencies, reduce taxes, empower the private sector, and attract investors.

“The creation of the new Angola National Petroleum and Gas Agency officially launched through Presidential Decree 49/19 in February 2019, is one of the most significant reforms since 2017” said Sergio Pugliese, the new African Energy Chamber President for Angola, a successful entrepreneur and oil executive, in an interview May 13.

Creation of the ANPG is part of Angola’s efforts to streamline and overhaul the governance of its hydrocarbons sector. The Agency will act as the country’s national concessionaire for hydrocarbon licences and be in charge of regulating the industry and implementing government policy. Up until now, state owned Sonangol was responsible for such licensing activities.

Nigeria’s story with oil and gas sector reform efforts has been neither as significant nor as swift as what is happening in Angola. On April 17, the Nigerian Senate reconsidered the Petroleum Industry Governance Bill (PIGB), which was rejected by President Muhammadu Buhari last year.

The PIGB and six other bills sailed through the Senate after the Senate’s technical committee worked on Buhari’s observations and re-drafted the affected clauses.

The Senate will wait for harmonisation with the House of Representatives after which the bills will be transmitted to the president for assent. Members of the lower chamber are, however, yet to reconsider the bills.

The PIGB is one of four parts of the proposed Petroleum Industry Bill (PIB), which seeks to update the out-dated provisions with a more comprehensive and current petroleum industry law that aligns with global standards. The president, earlier in July 2018, rejected the bill.

“If we’re talking 10 or 20 years ago, there was no discussion about PIGB. Anyone looking at the Nigerian oil sector knew what to expect. But right now if you look at it, you don’t know” Jubril Kareem, an independent energy analyst said in an earlier interview. “You don’t know if the current rules you’re using will be applicable next year. Most companies would rather wait for PIGB to be sorted out before making investment decisions.”

Since 2017 elections, Angola’s oil and gas sector has been featured in numerous conferences aimed at linking top government officials with the global energy industry.

Angola is ranked second largest oil producing in sub-Saharan Africa and an Organisation of Petroleum Exporting Countries’ member with an output of approximately 1.55 million barrels of oil per day and an estimated 17, 704.5 million cubic feet of natural gas production.

The Nigerian National Petroleum Corporation had projected Nigeria’s oil reserves will hit 40 billion barrels by 2020. This was to enable Africa’s biggest oil producer increase daily production capacity to three million barrels per day, earn more revenue and stay relevant in the global oil market. The oil reserves are currently at 37 billion barrels and daily production has average 1.70 million barrels per day.

However, the Nigerian oil and gas industry is currently experiencing declining reserves owing to reduced exploration due to the absence of clear fiscal policy. This has retarded investments flows into the sector. Militancy in the Niger Delta, Nigeria’s major oil producing area has caused much concern also.

Emmanuel Ibe Kachikwu, Minister of State Petroleum Resources, recently said that Nigeria’s oil and gas industry suffers from an investment gap of $100 billion but filled $40 billion in the last two years.

“$40 billion is not enough to drive this industry. Our estimate is that we need about $100 billion in investments to propel this sector. Those investments will go into gas projects, into the pipelines that have to be replaced; they will go into new plants and into the flare policy of the federal government.”

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