Digital Petroleum and Economic Evaluation under Nigeria’s Petroleum Industry Act: Development and Validation of an Integrated Economic Evaluation and Investment Support Tool

The Petroleum Industry Act (PIA) 2021 introduced a new fiscal framework for Nigeria's upstream petroleum sector, creating a need for reliable and efficient tools capable of evaluating petroleum investment opportunities under the evolving fiscal regime. However, conventional spreadsheet-based economic evaluation methods are often characterized by extensive manual computations, limited automation, and inadequate integration of risk and uncertainty analysis. This study developed and validated a Python-based Economic Evaluation and Investment Decision Support Tool (EEIDST) to provide an integrated digital framework for petroleum fiscal and economic evaluation under the PIA 2021. The study adopted a design, development, and validation methodology. The EEIDST integrates petroleum fiscal modelling, discounted cash flow analysis, economic evaluation, and sensitivity analysis within a unified analytical environment. The tool was designed to evaluate key economic indicators, including Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI), Payback Period, Unit Capital Cost, Unit Operating Cost, Unit Technical Cost, and Government Take. Verification of the computational accuracy of the EEIDST framework was done using representative onshore petroleum project data with an independently developed Excel-based discounted cash flow model. Results showed a high level of agreement between the two model, with percentage errors for key economic indicators ranging from 0.01% to 3.73%, confirming the computational accuracy of the EEIDST model. Then validation of the reliability of the model was done through oil price and CAPEX sensitivity analysis and scenario-based analysis to determine if results from the model are logical and consistent with petroleum economic principles. The response of the EEIDST solution was consistent with established petroleum economic principles, where higher oil prices improved project profitability, higher capital costs reduced investment performance. The study concludes that the EEIDST provides a reliable, transparent, and automated platform for petroleum economic evaluation and investment decision support under Nigeria's PIA fiscal regime. The tool offers practical value to investors, petroleum operators, regulators, financial institutions, and policymakers.

Petroleum Fiscal Regime; Investment Decision Support Tool

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