What are the notable updates and news from the past year?

In the last year, there have been positive changes in the industry. Several outstanding deals have received government approval, notably the Seplat-Exxon and Shell-Renaissance deals. Other major deals include the Oando-Eni deal and the Chappal Energies-Equinor deals. The oil and gas sector has been resurgent. Production has ramped up, consistently around 1.7 MMb/d, a significant improvement. The government has put considerable effort into enhancing policy consistency and certainty regarding fiscals for the oil industry.

New incentives support the development of gas projects, both onshore and shallow water, as well as deep water. The operating environment has improved, with theft reduced. There is a renewed investment appetite in Nigeria. Since our last conversation, at least two significant FIDs have been announced: Bonga North, about US$5 billion, and TotalEnergies’ Ubeta gas field, about US$550 million. The President released an executive order to reduce the cost of operations in Nigeria, cutting red tape at the NCDMB and NNPC. There has also been stability in the exchange rate, which is crucial. I am more optimistic now about monetizing Nigeria's gas reserves. There is increasing interest in FLNG and domestic LNG. The government encourages gas use, recognizing that Nigeria and Africa are energy poor. Given Nigeria's dollar dependence, it is essential to help the oil and gas industry survive. 

What is the demand for Deloitte's services, particularly in the energy and chemical sectors?

With the industry's resurgence, consulting demand has increased. Firms require financial, tax, and regulatory due diligence in M&A. With stability, companies are investing more in technology and AI. We are the primary point of contact for enterprise technology, including Salesforce and SAP. Our workload has significantly increased. The number of requests for proposals I receive is about 50% higher. We support clients with internal control, regulatory compliance, strategy, human capital, assurance, and risk management. 

How do you view the chemical sector in Nigeria?

There is significant potential in the chemical sector, particularly in gas chemicals. Beyond Dangote, other upcoming projects include the BUA refinery in Akwa Ibom. NNPC is revamping its refineries, and numerous modular refineries are being licensed. The most significant value in the industry lies in adding value to crude oil, where petrochemicals play a role. Nigeria recognizes the need to export refined products. With production stabilizing, the government is improving the environment for petrochemicals. Investor interest in this sector is increasing. The Dangote refinery has initiated significant momentum. The Dangote refinery operates at full capacity and is fully automated. It is a US$20 billion project, but with assured production, the midstream and downstream sectors, including chemicals, can thrive. This development positions Nigeria as a regional hub.

What is your perspective on the government's ambition to increase oil production?

The government's ambition is commendable, but it will be challenging. The focus is on near-field opportunities for existing producers. With the completion of several deals, new owners will invest more and maximize the potential of the assets. Production will increase. Rig counts are increasing, supporting the government's ambition to ramp up oil and gas production. The non-associated gas incentives encourage offshore investment. These incentives are structured to favor leaner gas, which is a logical approach. There is a focus on exploiting both shallow and deep-water reserves, each with tailored incentive packages.

Can you discuss the incentives for gas for export versus domestic use?

The royalty paid for domestic gas is half of what is paid for exports. Export gas is also necessary, as NLNG is operating below capacity. Efforts are underway to increase gas supply, and Train 7 will become operational in 2026. The government is encouraging investment in the midstream sector through the national gas expansion program. There is a focus on ensuring domestic gas utilization for power plants and independent power producers. There is no value-added tax on gas supplied to independent power producers, but gas supplied to pipelines is subject to VAT. There is a domestic gas supply obligation, with prices regulated by the government. Once domestic commitments are met, sales can occur on a willing buyer-willing seller basis. These incentives encourage domestic gas utilization.