Middle East & Africa No Fiscal Reforms in Algeria
Algeria will not reform its fiscal regime in 2012, despite the lack of bids by international oil companies (IOCs) in the last three exploration licensing rounds. Although the ministry has hinted at petroleum fiscal reform and for the first time admitted that tough fiscal terms were to blame, opposition from nationalistic elements in government will delay any move to offer more favourable terms. The country aims to increase its production capacity but faces competition for exploration dollars from neighbouring post-Gaddafi Libya, which holds the largest oil reserves in North Africa.
More Finds In West African Transform Margin
We expect the West African Transform Margin (WATM) to yield another giant deepwater discovery in 2012, continuing its success from 2011 after Ghanaian discoveries such as Paradise, Teak and Gye Nyame. Exploration activity will continue along the WATM, where we expect at least 15 wells over the next 12 months. Anadarko is due to announce the results of the Jupiter well in Sierra Leone in early 2012, while riskier exploration further west may extend the prolific Cretaceous play to Mauritania – heralding the ‘Mauritania Trend’.
Growing Frustration With Non-Passage Of The (PIB) Bill In Nigeria.
As we predicted, the Petroleum Industry Bill (PIB) in Nigeria was not passed in 2011. Wood Mackenzie believes that its prospects in 2012 – in its current form – are also dim. The PIB is cumbersome and in our view too big to generate support within government. With the bill stalled in parliament, there is growing impatience among operators wanting some certainty on what the playing field will look like. In 2012, we think that this pressure will result in the PIB being broken up into smaller pieces, with the revision of the fiscal terms considered first.
Major projects are in limbo partly because of this legislative inertia. If there are no signs of progress by mid-year, we believe that M&A activity could return to Nigeria’s deepwater sector.
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