Nigeria Risks 1.1 Million Barrel Daily Oil Loss Over Helicopter Landing Fees

The Nigerian Federal Government's decision to impose landing fees on helicopter operators in the oil and gas sector could lead to a potential loss of 1.1 million barrels of oil per day if operators shut down operations in response. The move, spearheaded by the Ministry of Aviation and Aerospace Development, has sparked outrage among helicopter operators who are threatening to cease operations or seek legal action.

This dispute has significant implications for Nigeria's economy, as oil production is a crucial sector that generates a substantial portion of the country's revenue. A loss of 1.1 million barrels per day could have far-reaching consequences for the country's economic stability and global oil markets.

Minister of Aviation Festus Keyamo released a memo granting exclusive rights to NAEBI Dynamic Concepts Limited to collecthelicopter landing leviesat all aerodromes in the country. The memo directs all operators and stakeholders to comply with the mandate, threatening sanctions for non-compliance. "It is imperative that all operators and stakeholders fully comply with this mandate, by granting total access to Messrs NAEBI Dynamic Concept Limited for the collection of the levy, effective immediately. Non-compliance with this directive will constitute a breach of this mandate and will be met with appropriate sanction,"the memo stated.

However, helicopter operators have questioned the basis for the landing charge, arguing that they already pay for services rendered to them. Mr. Ado Sanusi, Managing Director and CEO of Aero Contractors, warned that operators may shut down or seek legal action due to the increase in landing fees. "I don't think it is a good thing to do because the International Civil Aviation Organisation, ICAO, recommended that service providers in the aviation industry, which are government agencies, should engage in cost recovery, but unfortunately government has turned the agencies to profit-making organisations in the aviation industry,"Sanusi stated.

Sanusi further pointed out that the helipads used for offshore operations are owned by international oil companies, and operators already pay their due charges to aviation agencies. The government's decision to impose additional landing fees has been met with strong opposition from the aviation industry.

Why this matters: The potential consequences of this move are significant, as 95% of helicopter operations in Nigeria are connected to oil and gas services, with 90% of the country's oil and gas production activities conducted deep offshore where helicopters are the only viable means of daily transportation. If operators follow through on their threats to shut down operations, Nigeria could face a loss of 1.1 million barrels of oil per day, dealing a severe blow to the nation's oil production output, which currently stands at around 1.3 million barrels per day.

As the standoff between the Federal Government and helicopter operators continues, the fate of Nigeria's oil production hangs in the balance. The aviation industry remains steadfast in its opposition to the landing fees, while the government insists on enforcing compliance. The outcome of this dispute will have far-reaching implications for both the aviation and oil sectors in Nigeria.

Key Takeaways

• Nigeria imposes landing fees on helicopter operators in oil and gas sector.
• Operators threaten to shut down, potentially losing 1.1 million barrels of oil per day.
• Aviation industry opposes fees, citing existing payments for services rendered.
• 95% of helicopter ops in Nigeria are connected to oil and gas services.
• Dispute outcome will impact Nigeria's oil production and economy.