Economic Evaluation of Nigerian Marginal Oil and Gas Field using Financial Simulation Analysis

Yusuf Opeyemi Akinwale and John-Felix Kayode Akinbami
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Yusuf Opeyemi Akinwale: Faculty of Economic Sciences and Information Technology, North West University, Vaal Triangle Campus, South Africa,
John-Felix Kayode Akinbami: Centre for Energy Research and Development, Obafemi Awolowo University, Ile-Ife, Nigeria.

International Journal of Energy Economics and Policy, 2016, vol. 6, issue 3, 563-574

Abstract: Marginal oil and gas field could contribute immensely to wealth creation, employment generation and confidence in local oil firms if properly exploited by the indigenous firms. Despite the laudable marginal field initiative by the government, indigenous players still face challenges in exploiting these fields in Nigeria. This study evaluates the fiscal regime and the economic factors that could be hindering oil field development among the indigenous oil firms. The result of the financial cash flow modelling found that the marginal oil field s project is viable with post-tax net present value (NPV) and expected monetary value above $29 million. The petroleum profit tax, royalty and crude oil price have more impacts on the field s NPV. The study suggests a periodic assessment of the fiscal regime and appropriate policy by the government to encourage the local players in developing the marginal oil field.

Keywords: Indigenous; Marginal Oil and Gas Field; Financial Simulation; Government (search for similar items in EconPapers)
JEL-codes: F38 Q47 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ2:2016-03-22

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