Seplat Energy said it has wrapped up the conversion of its two onshore operations, Seplat West and Seplat East Onshore, to a new industry fiscal system that gives more room for output expansion, investment and cost efficiency.
The change means Nigeria’s biggest energy firm by market value is adopting the operational model laid out by the Petroleum Industry Act 2021 (PIA), while letting go of the framework of the old Petroleum Profit Tax (PPT) regime, known for heaping high tax burdens on oil producers.
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“Conversion to the PIA fiscal regime has been an important focus for Seplat and we are delighted to have delivered, along with our respective JV partners, the conversion of our onshore operated assets to the PIA regime,” CEO Roger Brown said in a statement Tuesday.
Mr Brown expects the switch to boost profitability and cash flow in the corporation’s onshore activities going forward, and said he is upbeat about the value the move will unlock.
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Towards that end, the new direction has been integrated into Seplat’s medium-term growth plans for guidance.
OMLs 4, 38 & 41 and 53, four onshore assets which together delivered 31 per cent of Seplat’s output in the first three quarters of this year, are the facilities so far converted.
Seplat holds a 45 per cent working interest in each of the joint ventures in which the Nigerian Petroleum Development Company owns the remaining shares.
The oil driller has set itself a 2027 cutoff date for its offshore business to similarly adopt the framework.
PIA
The PIA, the culmination of a broad fiscal, operational and regulatory overhaul of the Nigerian oil and gas sector four years ago, seeks to make the industry more competitive and investor-friendly among other objectives.
Apart from offering favourable tax rates to producers, compared to the PPT, it requires the petroleum minister to secure the recommendation of the Nigerian Upstream Regulatory Commission (NUPRC) before granting OMLs, now petroleum mining leases (PMLs), to applicants.
That condition, absent in the old law, is targeting regulatory clarity, while preventing abuse of power.
In situations where the minister refrains from notifying the regulator of his decision on an applicant’s request for a lease or license within a 90-day period, the application shall be considered granted.
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Seplat, which is quoted in Lagos and on the main board of the London Stock Exchange, said it has fulfilled all of NUPRC’s technical and regulatory requirements alongside joint venture partners.
It plans to kick-start the implementation of the framework from January, having obtained new PML and Petroleum Prospecting Lease numbers.
Seplat is valued at N3.5 trillion at the end of trading hours in Lagos on Tuesday.
