oil and gas contracts in nigeria

12 Dec oil and gas contracts in nigeria

Department of Building, University of Lagos, Akoka, Yaba, Lagos, Nigeria ABSTRACT Oil exploration contracts are generally affected by several risks which often hamper the development of economic and sustainable projects in the oil and gas sector of the economy. However, no commercial discovery was made until 1956 when the company made the first commercial discovery of oil in Oloibiri, in the present day Bayelsa State, in the South South region of Nigeria. Thus, in 1969 the first major attempt at producing a detailed and comprehensive law for the grant of rights was made through the promulgation of the Petroleum Act 1969. The repeal in 1958 of Section 6(1) (a) of the Mineral Oils Ordinance of 1914 broke Shell D’arcy’s monopoly and spurred on other companies to become involved in exploratory activities. Literally all of Nigeria’s PSCs are on deep offshore and inland basin contract areas and their major advantage for Nigeria is their ability to attract new investment from IOCs to these frontier areas through flexible fiscal and legal regimes while at the same time eliminating the government’s financial responsibility of contributing funds to petroleum activities by shifting this burden to the IOCs. In 1971, the first JOA was executed in Nigeria. Oil and Gas Jobs in Nigeria 2020 The JOA allowed the NNPC to be able to own certain interest percentages in the operations of licences that were in existence prior to the 1969 Petroleum Act. Nigeria’s oil is situated in Niger Delta around the coastal areas of south-east Nigeria. The contract is for the installation and commissioning of a dual fired (low pour fuel oil/gas) 150-200MW power plant in Kaduna, Nigeria. The Deep Offshore Decree amends both the Petroleum Act 1969 (as amended) and the Petroleum Profit Tax Act (as amended) and according to section 15 of the decree, all pre-existing petroleum laws are to be read in conformity with it. Chevron Nigeria Ltd. (CNL) has let a contract to Frames Group BV, Alphen aan den Rijn, the Netherlands, to provide a natural gas dehydration unit for the 165-MMcfd Okan offshore gas … Thus, a new round of PSCs was signed in 1993 and others have been entered into since then. Estimates of Nigeria’s undiscovered gas reserves range from 300 – 600 TCF. In Nigeria, oil and gas play a pivotal role in the country's economy being the government main source of income. Explorations were funded by the IOCs and NNPC in proportion of their participation interests. Between 1960 and 1969 these concessions began to be criticised as being too colonialist and exploitative in nature. 2.1 What are the rules relating to trade union … 311 of 24 February 1972, announced the assignment to NNOC of all rights to explore for and produce petroleum in Nigerian territory including concession areas which might be relinquished or surrendered to the government, except for those areas which were covered by existing licences. 151 0 obj <> endobj 177 0 obj <>/Filter/FlateDecode/ID[<2B18DE122F2847269F91D2D1D0A78CC8>]/Index[151 63]/Info 150 0 R/Length 114/Prev 270823/Root 152 0 R/Size 214/Type/XRef/W[1 2 1]>>stream These joint venture arrangements have produced the majority of Nigeria’s oil over time although recently some of these joint ventures have undergone some restructuring. Prior to 1999, there was no specific legislation dealing with the Nigerian PSC arrangement. Furthermore, in 1972 the Federal Government through Government Notice No. Nigeria’s oil industry has always struggled with the challenge of devising appropriate legal regimes and fiscal policies aimed at maintaining the balance between meeting national objectives and at the same time responding to developing trends in the global oil industry and encouraging investment. The gas quality is high – particularly rich in liquids and low in sulphur. from which Crude Oil and Associated Gas may be produced; “Decommission” means, in respect of the Contract Area or a part of it, as the case may be, to abandon, decommission, transfer, remove and/or dispose of structures, facilities, installations, equipment and other property, and other works, used in Petroleum Operations in the area, to clean Introduction Oil and gas exploration and development are characterised by huge capital expenditures, high technological expertise and the ability to manage investment risks, Consequently, two major contractual arrangements emerge from the petroleum development rights, that is, joint venture arrangement (JV) and production sharing contracts (under the contractual agreement). Today, PSCs have largely overtaken JOAs as the most utilised type of upstream contractual arrangement in Nigeria. However, the PSC was not widely introduced until the early 1990s as a result of the issues with the JOA highlighted above. Nigeria has therefore been described largely as a gas province with some oil. In 1971 the real opportunity for increased equity participation by the state was enhanced by Nigeria joining OPEC and with the formation of the Nigerian National Oil Corporation (NNOC) through Decree No. Find Latest Oil and Gas Jobs in Nigeria for 2020. Today, pure service or risk service contracts are all but obsolete as a major type of upstream contractual arrangement in Nigeria. Nigeria National Petroleum Corporation. Oil & Gas. In 1905, the first known mineral survey was performed in present day Ondo State which is in the South West region of Nigeria. Furthermore, Nigeria’s oil and gas industry was expanding into shallow and deep offshore areas and the need to source the necessary funding and technical expertise to accelerate the scope of exploration activities in these deep offshore and inland basin frontier areas led to the replacement of JOAs with PSCs as the new contractual regime. Cost: $16 billion. Publishing them creates space for much-needed public scrutiny of deals that can be worth billions of dollars to the people of Nigeria. A new empirical study on oil and gas in Nigeria, which serves as a useful general introduction to many aspects of the country's oil and gas industries and related laws. Meanwhile on the international scene, the conflict between oil producing developing countries and IOCs eventually led to the UN resolution on permanent sovereignty over natural resources, which shifted the balance of power from the IOCs to the developing countries. He obtained his West African School Certificate in 1978 from the Federal Government College Jos and later bagged a First Class Honours in Mechanical Engineering from Ahmadu Bello University, Zaria in 1982. Features of Production Sharing Contract . Nevertheless, the reimbursement of such cost only occurs on the discovery and production of commercial oil reserve. It also provides The first and the most important feature of a PSC is that the title of the oil and gas remains with the state and not the IOC. A result of this has been the use of various types of petroleum contracts over the course of Nigeria’s petroleum development history. Nigerian service contracts were originally entered into by the NNPC in 1979 with the goal of avoiding the less beneficial aspects of the PSC such as high percentages of cost oil and tax oil, windfall profits accruable to IOCs during peaks in oil prices and the management and operational responsibility by the IOCs. 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