Welcome to Scribd. Sign in or start your free trial to enjoy unlimited e-books, audiobooks & documents.Find out more
Download
Standard view
Full view
of .
Look up keyword
Like this
1Activity
0 of .
Results for:
No results containing your search query
P. 1
Energy and Mining Law Newsletter August09 (2)

Energy and Mining Law Newsletter August09 (2)

Ratings: (0)|Views: 27|Likes:
Published by Blackfriars LLP

More info:

Published by: Blackfriars LLP on Mar 27, 2011
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as DOC, PDF, TXT or read online from Scribd
See more
See less

03/27/2011

pdf

text

original

 
WWW.BLACKFRIARS-LAW.COM
PRODUCTION SHARINGCONTRACTS IN THE NIGERIANOIL AND GAS SECTORAugust 2009 Vol. 22: Issue 8
Nigeria had in the past yearsengaged in Joint VentureAgreement (JVA) for the explorationof her petroleum resources. ThisJVA in Nigeria was associated withpoor funding, due to the imbalancein the financial capacity of thedifferent Joint Venture Partners,especially the Nigerian governmentwhich has other pressures on itsresources. This led to the reductionin oil operation and consequentialloss of revenue.Consequently, the expansion of theNigerian oil and gas industry led tothe allocation of acreages in theshallow and deep offshore areas toforeign oil companies. Thisincreased the need for a differentpolicy in the oil and gas sector, asthe expansion brought its ownchallenges in terms of funding andtechnical complexity.In the bid to overcome thesechallenges, enhance the country’soil reserve and improve theeconomy of the country, ProductionSharing Contract (PSC) wasintroduced as a policy for theexploration of the country’spetroleum resources.This policy is mainly regulated bythe Deep Offshore and Inland BasinProduction Sharing Contract Act,Laws of the Federation of Nigeria2004 (volume 5).Under this policy the NigeriaNational Petroleum Corporation(NNPC) a governmental agencyengages a competent contractor(Petroleum Exploration andProduction Companies or itsSubsidiary duly registered inNigeria) to carry out petroleumoperations in Nigeria.The contractor undertakes theinitial exploration risks and if oil isdiscovered and extracted, thecontractor will be allocated aportion of the oil producedsufficient to reimburse its costs of production (cost oil), as well aspayment of royalty (royalty oil)which is fixed in accordance withthe location of the oil field suchthat the deeper the concession isfrom onshore, the lower the royaltyrate that is applicable. Also fromthe production, a portion will beallocated as tax to the NigerianGovernment (tax oil). What everremains after these deductionsshall be shared among the parties
©Blackfriars LLP 2010. All rights reserved. This document is for general guidanceonly. Definitive advice should be sought from counsel if required. Blackfriars LLP,The Penthouse Floor, Itiku House, 28-30 Macarthy Street, Lagos. Tel: +234 1 7390397; +234 1 736 9797; +234 1 736 9795; Fax: +1 646 536 8978.http: www.blackfriars-law.com Email: info@blackfriars-law.com 

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->