Expert links delay in reviewing PSCs to unassented PIGB, others
Leading energy consultant and managing partner, J.O Adidi and Co., John Adidi, has linked the observed delays in the necessary review of Production Sharing Contracts (PSCs) with International Oil Companies (IOCs) to the non-passage of the Petroleum Industry Governance Bill (PIGB). Besides, the inability of PIGB to fly is with holding the progress of other divisions of the Petroleum Industry Bill (PIB).
Several reports in the last few years have continued to reveal that existing PSCs as they are currently structured have been creating rooms for revenue losses for the Federal Government and need to be reviewed.
Only recently, the Nigeria Extractive Industries Transparency Initiative (NEITI), further averred that Nigeria had lost no less than $16 billion, over a 10-year period (2008–2017), due to non-review of the 1993 production sharing contracts (PSCs) with oil companies.
Recall that the PSC was introduced in 1993 to address some of the issues faced by the Joint Operating Agreement (JOA) and to provide a suitable agreement structure to encourage foreign investment in offshore acreage.
Under the PSCs, the NNPC is the holder of the business while the international oil company (IOC) is the contractor. In 1993 the NNPC entered into PSCs with eight IOCs and Nigeria is believed to have attracted much needed additional foreign investment.
NEITI report between 1998 and 2005, showed that total production from PSC assets was below 100,000,000 barrels per year, while Joint Venture (JV) companies produced over 650,000,000 barrels per year.
By 2017, total production by PSC companies was 305,800,000 barrels, which was 44.32 per cent of total production. Total production by JV companies was 212,850,000 barrels, representing 30.84per cent of total production.
Apart from government reports that it is losing revenue on the current PSC, IOCs are also claiming loss of fortunes and had been calling for the review of the PSC, but the decline in assenting the PIGB by President Muhammadu Buhari remains the major clog in the wheel of the industry progress.
