How To Reduce Costs Of Producing Oil In Nigeria – TotalEnergies

Mr. Mathieu Bouyer, Country Chairman and CEO of TotalEnergies EP Nigeria Limited, has urged the Federal Government to provide strong fiscal incentives and foster healthy competition to reduce production costs.

Speaking at an industry conference in Abuja, Bouyer highlighted that Nigeria’s deep water oil and gas sector has been stagnant for a decade since the Egina Final Investment Decision (FID). He attributed this stagnation to high operational costs and a lack of contractors and competition.

Bouyer emphasized the need for the government to understand why many contractors have left Nigeria and to implement measures to bring them back. He noted that even with fiscal incentives, high costs would deter investment, and competition is essential to drive these costs down.

He also mentioned the importance of being competitive and adaptable to meet requirements as capital expenditures are limited.

Bouyer pointed out the effectiveness of the Service Level Agreement (SLA) signed between the NNPC and international oil companies (IOCs) in September 2023, which proved beneficial for the Ubeta development project. He praised Nigeria’s vast oil and gas resources, particularly in the deepwater sector, where TotalEnergies is a major operator with projects like Egina and Akpo.

He suggested that the federal government should adopt similar fiscal terms for Non-Associated Gas (NAG) development to move the deepwater industry forward. Bouyer acknowledged recent government policy reforms, especially the executive order implemented through the Special Adviser to the President on Energy, Olu Verheijen, and the NUPRC, which enabled the sanctioning of the Ubeta project in June. This, he said, demonstrated that sound measures attract investment.

TotalEnergies has also been a significant contributor to economic growth and tax revenues in its operating markets, with production and income taxes amounting to over $24.7 billion in 2023 and an average tax rate of 38.2%. Its extractive entities paid $28.3 billion in taxes and production fees to governments globally. In Africa, the company operates in over 40 countries, contributing to economic and social development.

In Uganda, TotalEnergies is leading the development of the Tilenga and Kingfisher oil fields in partnership with China National Offshore Oil Corporation and the Uganda National Oil Company. The company has also invested in local infrastructure and community development, including training programs for Ugandan youths.

In Angola, TotalEnergies holds significant interests in various blocks and has announced the FID for the Cameia-Golfinho field development. It anticipates the Quiluma and Maboqueiro gas fields to come online in 2026, contributing to Angola LNG. The company holds a substantial market share and plays a crucial role in Angola’s economy through infrastructure development and export revenues.

In Namibia, TotalEnergies’ discoveries in the Orange Basin are expected to boost the economy by attracting foreign investments and stimulating local procurement.

In Nigeria, TotalEnergies’ operations span oil and gas exploration, renewable energy, electricity, green gas, and retail activities. The company employs over 1,800 people and operates 530 service stations. It is involved in the Nigeria LNG plant and carbon-neutral initiatives like the Zero Routine Flaring by 2030 program. TotalEnergies also markets products and services through its service stations and offers solar solutions to low-income populations.

TotalEnergies operates under various contractual frameworks across Africa, including concession contracts and production sharing contracts (PSCs). These agreements reflect the company’s commitment to long-term partnerships that benefit both the company and host countries by sharing revenues and responsibly managing resources.