Nigeria Extractive Industries Transparency Initiative (NEITI) said the country has lost at least $16 billion in the last 10 years due to non-review of the 1993 Production Sharing Contracts, (PSC) with oil companies.
In its latest report released in Abuja tagged “The Steep Cost of Inaction”. NEITI said that the loss was recorded between 2008 and 2017.
It said that analysis was conducted for the seven producing fields of the 1993 PSCs, which includes the the Abo (OML 125): operated by Eni; Agbami-Ekoli (OML 127 & OML 128): operated by Chevron; Akpo & Egina (OML 130): operated by Total and South Atlantic Petroleum; and Bonga (OML 118): operated by Shell.
Others, it said are Erha (OML 133): operated by ExxonMobil; Okwori; NDA (OML 126): operated by Addax; and Usan (OML 133): operated by ExxonMobil.
The study done in conjunction with Open Oil, a Berlin-based extractive sector transparency group, found that the losses could be up to $28 billion if, after the review, the Federation were allowed to share profit from two additional licenses.
NEITI called for an urgent review of the PSCs to stem the huge revenue losses to the Federation.
It added that the review was particularly important for Nigeria because oil production from PSCs had surpassed production from Joint Ventures (JV) with PSCs now contributing the largest share to federation revenue.
It said: “Between 1998 and 2005, total production by PSC companies was below 100 million barrels per year while JV companies produced over 650 million barrels per year. By 2017, total production by PSC companies was 305.800 million barrels, which was 44.32 percent of total production. Total production by JV companies was 212.850 million barrels, representing 30.84 percent of total production.
“The first review was to be triggered if oil prices exceeded 20 dollars per barrel. Section 16 (1) of the Deep Offshore and Inland Basin Production Sharing Contracts specifies that: The provisions of the Act shall be subject to review to ensure that if the price of crude oil at any time exceeds 20 dollars per barrel, real terms, the share of the Government of the Federation in the additional revenue shall be adjusted under the Production Sharing Contracts to such extent that the Production Sharing Contracts shall be economically beneficial to the Government of the Federation.”
NEITI stated that the Deep Offshore and Inland Basin Production Sharing Contracts provided for a review of the terms on two conditions.