The Nigerian authorities are dragging their feet on signing the Aje deal and, despite the new petroleum act, doing business in Nigeria remains difficult.
It has been two years since Panoro Energy and Petronor signed a deal on the Aje offshore field. However, Nigeria’s Minister of State for Petroleum Resources and former governor of oil-producing Bayelsa state, Timipre Sylva, has yet to give the green light to the transfer of a 6.5% stake (equating indirectly to 12.2% of all revenues) in Aje, the only producing field in Nigeria outside the Niger delta.
Aje (OML 113) is located offshore from Lagos state and operated by Yinka Folawiyo Petroleum (YFP). It has produced around 5,000 bpd since 2016. From month to month for the last two years, Panoro has been forced to push back the conclusion of the agreement. The latest signing date, 30 November 2021, was pushed back until 30 January 2022. There is nothing obviously holding the agreement back. It has been approved by the Department of Petroleum Resources (DPR), which became the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in mid-2021 following the Petroleum Industry Act, and by Sylva’s staff. However, the road ahead for Panoro and Petronor is still long. Even with Sylva’s stamp of approval, they will still need to obtain President Muhammadu Buhari’s green light, as he also oversees the oil ministry.
Falling production
Though Panoro, whose chairman is the Frenchman Julien Balkany, had hoped the regular deadlines it gave Petronor, headed by Eyas Alhomouz, would put pressure on the Nigerian government to move forward, they have thus far been unsuccessful. Yet the Nigerian authorities are not exactly buried under a mountain of deals to sign. Since Buhari took office in 2015, almost no final investment decisions have been made. Due to a chronic lack of investment, overall production is down. Nigeria is not reaching its Organisation of the Petroleum Exporting Countries (OPEC) quota and no longer has the means to produce the amounts it did before Covid-19. It is currently producing around 1.2m bpd, far below the 2 million bpd it achieved for many years.
