The Impact of New Nigerian Petroleum Industry Bill (PIB) 2021 on Government and Contractor Take

In this research paper, the impact of the new Nigerian Petroleum Industry Bill (PIB) 2021 on both the government and the contractor take is investigated in detail. For the purpose of this study, three different simulated reservoir sizes are assumed for onshore, shallow water, and deep water terrains using QUE$TOR software. These base cases are 40 MM bbl, 100 MM bbl, and 1000 MM bbl oil in place. A detailed cash flow model of the new bill is developed to evaluate the terrain-based performance using selected profitability indicators such as internal rate of return (IRR), Profitability Index (PI ), discounted and undiscounted take of both the contractor and the government. To evaluate the impact of the selected variables on the selected indicator, Crystal Ball is used to perform the Monte Carlo simulation approach. Based on stochastic analysis, our results show that both IRR and PI are higher for onshore concessions in comparison with both shallow and deep water concessions. On the other hand, the contractor’s take for deep water concessions is significantly higher than the onshore and shallow water fields. The key feature of the proposed PIB 2021 is that it provides the government with increasing take with increasing the reservoir size. This progressive feature may encourage the contractors to develop the small and marginal fields which have low profitability under the current fiscal systems. Finally, the contractor take is reported to be the lowest for shallow water concessions. This lower take may discourage the investors from investing in shallow water concessions unless proper incentives are provided.