REDEFINING THE LEGAL ISSUES AND FISCAL RESPONSIBILITY CHALLENGES OF DEEP OFFSHORE PRODUCTION SHARING CONTRACTS IN NIGERIA OIL INDUSTRY

Abstract

In oil exploration and exploitation, there are different forms of contractual arrangements between the host country/government and the exploration companies and one of which is the Production Sharing Contracts. This form of contract enables both parties, which is the oil-producing country and the oil company, to share the risks and rewards of oil exploration and exploitation activities. In Nigeria, Production Sharing Contracts was firstly regulated under the Deep Offshore and Inland Basin Production Sharing Contracts Act of 1999 before amendments was made to the legislation in 2019. The amendments were aimed at improving the revenue position of the Nigeria government and streamline some of the lacunas observed in the 1999 Act. Undoubtedly, the proposed amendment further explicitly affects the fiscal nature of the PSC agreements between the IOCs and the Nigerian National Petroleum Corporation (NNPC), creating new obligations and royalty regimes. It is based on this premise that the objective of this paper is set. Therefore, the paper seeks to evaluate the nature and effect of the amendments introduced in the PSC Amendment Act of 2019 while highlighting some of the challenges and problems posed by the PSC Amendment Act regarding the revenue ability of the Nigerian government. The paper will also highlight some of the possible impacts on PSCs in particular and on the Nigerian oil sector in conjunction with the whole economy.