Nigeria's Risky New Oil Revenue Plan

Nov 18, 2019 | 10:00 GMT

Color satellite image of the Niger Delta region in Nigeria. The city of Lagos, the second-most populous city in Africa, can be seen west of the river on the Atlantic coast.

A satellite image of Nigeria's oil-rich Niger Delta region. Lucrative offshore projects have helped boost the country's crude production in recent years.

(Planet Observer/Universal Images Group via Getty Images)


  • After years of delayed oil sector reforms, the Nigerian government has finally expedited a crucial bill that updates the terms for offshore investments.
  • Most of Nigeria’s most important deep-water fields will have their contracts renegotiated in the 2020s under the new investment terms, which include higher royalties and more frequent reviews.
  • But while the deep-water deals inked under these new terms may initially boost Nigeria's oil revenue, smaller profits for foreign firms and market uncertainty risks lowering investment in the long term.

Life just got harder for major oil companies operating off the coast of Nigeria. On Nov. 4, Nigerian President Muhammadu Buhari signed a law updating the terms of the country’s production-sharing contracts that, among other changes, increase royalties on international oil firms. As Africa's top crude producer, Nigeria is almost entirely financially dependent on its petroleum operations, which account for 90 percent of government revenue. The current oil glut has thus hurt Nigeria's pocketbooks particularly hard, forcing it to consider drastic measures to squeeze out more money from its growing offshore operations. But by placing international companies in its crosshairs, Nigeria instead risks driving away the crucial deep-water investments in needs to keep its lights on....

Keep Reading

Register to read three free articles

Proceed to sign up

Register Now

Already have an account?

Sign In