The Nigeria Extractive Industries Transparency Initiatives (NEITI) has said it was Nigeria and not the International Oil Companies (IOCs) operating in the country that should be held responsible for the delay or lack of review of the terms contained in the 1993 crude oil Production Sharing Contracts (PSCs) signed by both parties.
The federal government had reportedly failed to review the terms in the PSCs it signed with IOCs in 1993, to enable investments in deep offshore oil projects.
Based on this, the 1993 terms have remained untouched for close to 25 years, despite that the conditions provided for their review had been met.
NEITI explained at a meeting in Abuja where it unveiled an online information sharing platform – the NEITI Data Dashboard, that while the country signed the PSCs terms with the IOCs and was expected to follow up with periodic reviews as stipulated, it failed to do this, thus, resulting in huge oil revenue losses.
The agency noted that it could not blame the IOCs for the country’s ineptitude in this regards, adding that the monies that should have accrued to her from periodic reviews of the PSCs were gone and would not be regained.
In his remarks at the unveiling of the platform, which would provide Nigerians with simplified information about the country’s extractive sectors, NEITI’s Executive Secretary, Mr. Waziri Adio, stated that Nigeria had two options that should trigger a review of the PSCs terms.
Adio explained that the country was supposed to review the terms either when oil prices rose to $20 per barrel or after 20 years of operation of the PSCs.
Both conditions, he stated, were ignored by the country and the IOCs continued to operate with what they initially signed.
“We signed these agreements to attract the IOCs because at that time, the technology to explore oil was expensive and these incentives were offered. They were offended with the belief that at some points, they must have recouped their investments and those incentives would not be necessary again. So what we have done is to say, we failed to act, this is not money they owe us because we are the country, we are the ones that owns the law and the law says you should review and you failed to review you are the one that dropped the ball because we didn’t act,” Adio said.
According to him, the NEITI has embarked on a study of what the country lost within the period it failed to review the PSCs terms.
This, he noted, would help put a financial cost on her inactions and perhaps push her to take seriously issues such as this.
“What we are doing is not to say the companies owe us. We are doing a study to show that if some of the parameters had changed, and if we had reviewed what we were supposed to review, this is what the country had lost. Not to say that we should recoup the money because that money is gone. It is not money that anybody is owe us, but to put a cost to inaction so that we use that to make sure that something like that doesn’t happen again and also ensure that we do what we are supposed to do,” he added.
Recently, the Nigerian National Petroleum Corporation (NNPC) disclosed that President Muhammadu Buhari had given it the approval to undertake a review of all PSCs terms to reflect the current realities in the industry.
NNPC’s Group Managing Director, Dr. Maikanti Baru, told the Senate Committee on Petroleum (Upstream) that he had set up a committee to undertake this, adding that they would soon begin the review process.