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Lopsided PSCs: IOCs made nearly double of NNPC’s revenue in three years

Loopholes in production sharing contracts allowed international oil companies rake in nearly double of the federal government’s crude oil revenue between January 2015 and December 2017.

This is according to an occasional paper series released by the Nigeria Extractive Industries Transparency Initiative (NEITI) on Sunday.

The transparency watchdog said it got its data by reviewing financial and operations reports of the Nigerian National Petroleum Corporation (NNPC).

In the period under review, FG’s share of crude oil lifted or produced was 33.76% (721.16 million barrels), while IOCs and Independents got 64.01% (1.367 billion barrels).

In monetary terms, the value of the total crude oil and condensates lifted was $106.961 billion.

Of that amount, the value of crude oil lifted by the government was $35.893 billion while IOCs and independents raked in $68.591 billion.

NEITI said attacks on oil facilities have affected joint venture operations, where the government gets most of its crude oil revenue, hence the recent dependence on production sharing contracts (PSCs).

“Government lifting of crude oil has fallen substantially below lifting by IOCs primarily because PSCs now constitute the largest proportion of oil production. government’s take is higher with JVs,” the paper read.

“However, due to disruptions from attacks on onshore installations and the subsequent production shut-ins, the nation has relied heavily on offshore production. Such offshore productions are from PSCs where the IOCs have a higher take.”

NEITI urged the government to urgently make good of its plans to review the ‘obsolete’ agreements tied to the contracts in order to increase their share of revenue.

“The urgency of such reviews comes to light when it is considered that many of the onshore fields will be mature in the not too distant future. This even if attacks on installations subside, production from such fields will still fall.

“It is in this spirit that the recent announcement by NNPC of a presidential approval of the review of the PSCs is another positive development.”

Shettima Abba-Gana, acting chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), had earlier said that the federal government lost $21 billion to non-review of the contracts.

Oluwatoyin Bayagbon :