The Niger Delta Basin is the 12th largest petroleum system in the world with proved reserves of 35 billion barrels of oil and 180 TCF of gas. Installed production capacity is 3.0 million barrels/day, with an average daily output of about 2.5 million barrels/day. The government of Nigeria has set an objective of increasing oil reserves and production capacity to approximately 40 billion barrels and 4.0 million barrels/day by the year 2010.
These targets are believed to be achievable. The fiscal incentives that have been provided by the Government of Nigeria to multinationals to encourage exploration in the deep offshore parts of the Niger Delta Basin have produced, and are producing, successful results in the form of major discoveries. In turn, this has encouraged the multinationals to agree to the voluntary relinquishment of their non-core assets within the continental shelf and onshore areas to smaller exploration and production companies. The government, through legislation and fiscal incentives, is actively encouraging oil and gas companies to cease flaring, monetize their gas production, and enter into memorandums of understanding with companies to develop gas utilization projects.
The Nigerian Government initiated the so-called indigenous concession program (“ICP”), in the early 1990’s, to encourage indigenous Nigerians to participate in the upstream sector of the oil and gas operations in the country. The ICP program was designed and has been implemented to mirror the relationship between NNPC and the multinationals.
ICP companies are allowed to invite foreign technical and financial partners to work on oil blocks assigned to them.
As in several other jurisdictions around the world, the Nigerian Government adopted a set of fiscal incentives, including lower royalties and taxes, to encourage and facilitate indigenous participation.
The above offers great opportunities to capable indigenous companies to acquire and develop a portfolio of profitable assets. Because of our technical qualifications and capabilities, as well as our financial capabilities, Ambit intends to capitalize on these opportunities.