Wood Mackenzie has considered the impact of the All Progressives Congress' (APC) landmark victory in Nigeria’s general election on the country's oil and gas industry. Wood Mackenzie suggests that the defeated President Goodluck Jonathan’s public acceptance of the result is hugely positive for the country's upstream sector – greatly reducing the risk of unrest. However, Wood Mackenzie also cautions that as this is the first time in Nigeria's history that a civilian government other than the PDP has been elected, it also poses new challenges and uncertainties for the oil and gas sector.
 
Wood Mackenzie notes the following key considerations for the oil and gas industry:
• A series of new appointments will be made throughout government - among them a new minister of petroleum resources and a new head of the national oil company, the Nigeria National Petroleum Corporation (NNPC) is also likely. The new government's transition period could also result in delays to ongoing deals that have not yet been approved.
 
• In 2008, the PDP government proposed wide-ranging legislative and fiscal reform under the Petroleum Industry Bill (PIB), but passage had stalled.  APC's position on industry reform is not yet known, but the PIB will be redrafted.
 
• Wood Mackenzie says the industry's biggest fear is a sudden change of fiscal terms - particularly for deepwater production sharing contracts (PSCs) – in a bid to increase Government revenues, countering the deficit.  Even in a low oil price environment, Wood Mackenzie warns this risk cannot be ruled out.
 
• Nigeria's onshore production has been seriously affected by growth in oil thefts, leading to losses of upwards of 150,000 barrels per day (b/d) and equating to billions of dollars of lost revenue annually – for both operators and government.
 
• APC has expressed intent to tackle oil theft as a priority. Wood Mackenzie says that while the industry would welcome reduced losses, a 'get tough' approach could worsen the already difficult operating environment in the onshore Niger Delta in the short term.
Source: Wood Mackenzie