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Evaluating the Economic Impact of Fiscal Provisions in the Draft Petroleum Industry Bill on Offshore Marginal Oil Field Development

Journal Name:

  • International Journal of Science and Engineering Investigations

Publication Year:

  • 2015

Key Words:

Author NameUniversity of Author
Abstract (2. Language): 
Petroleum Fiscal System (PFS) is a key determinant of investment decision in the exploration and production (E&P) of oil and gas. It describes the relationship between: the host governments, the investors, and community with respect to how costs are recovered and profits are shared equitably. The Fiscal Provisions of the Petroleum Industry Bill (PIB) gives government a greater access to gross revenue and this consequently has an impact on the economics and profitability of oil and gas investments especially for marginal oil field development which is already very capital intensive. This paper reviews the economics of offshore marginal field development within the context of the ensuing petroleum industry institutional restructuring and reforms in Nigeria. It provides a review of the fiscal terms, instruments in the draft petroleum industry bill (PIB), the effects on the economics measure and government take statistics of a marginal oil field development in offshore Nigeria. Offshore PSC model for marginal oil field was developed using Excel spreadsheet and the result was compared to that of Monte-Carlo simulation. The model results of revenue Takes for each stake holders were impressive and calculated as Government Take being $659,424,516.52, Farmor Take at $539,529,149.89 and Farmee Take at $513,837,285.60 respectively as to compare with the result obtained by Monte Carlo simulation. Monte Carlo simulation process was incorporated to account for risk and uncertainties.
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  • 10
39
45
  • English

REFERENCES

References: 

[1] E. Egbogah, “50 Years of Oil Production in Nigeria,” Insitute of Petroleum Studies Monograph No. 2. Amethyst and Colleagues Publishers, Port Harcourt, 2010.
[2] O. O Iledare, “Evaluating the impact of Fiscal Provisions in the Draft Petroleum Industry Bill on Offshore E&P Economics and Take Statistical in Nigeria,” SPE Paper 136972, 2010.
[3] Petroleum Industry Draft Bill, 2009.
[4] M. Dixon, “Nigeria Indigenous Licensing Rounds Begin”. Hart’s E & P. 2001, pp. 22
[5] J. C. Echendu, and O. O. Iledera, “Comparative performance Analysis of Petroleum Sharing Contracts in Angola, Equatorial Guinea, Gabon and Nigeria,” SPE Paper 162990, 2012.
[6] A. A. Oyekunle, “Impact of the Petroleum Industry Bill on Deepwater Economics,” SPE 15077, 2011.
[7] P. M. Wihbey, “The strategic Global Importance of Nigeria’s Petroleum Industry Bill,” Seminar organised by SPE Section 103, Port-Harcount and Institute of Petroleum Studies 2010.
International Journal of Science and Engineering Investigations, Volume 4, Issue 45, October 2015 45
www.IJSEI.com Paper ISSN: 2251-8843 ID: 44515-08
[8] M. Ibe and J. A Ajienka, “Comparative Evaluation of Marginal for Joint Venture Agreement and Production Sharing Fiscal System in Nigeria,” SPE 128886, 2009.
[9] O. O., Iledare, “Analyzing the impact of Petroleum Fiscal Arrangement and Contract Terms on Petroleum E&P Economics and the Host Government Take,” SPE paper 88969, 2004.
[10] A. G Aret, “Marginal field developments,” progress so far”, SPE Nigeria Council sponsored Workshop NICON Hilton Hotel, Abuja, Nigeria, 16 March.pg.1-7, 2001.

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