‘Why Nigeria govt increased stake in oil blocks’

28 September 2012, Sweetcrude, ABUJA – NIGERIA’S Petroleum Minister, Mrs. Diezani Alison-Madueke, said the increase in government’s stake in the deep offshore blocks from 61 per cent to 73 per cent, was necessitated by prevailing realities in the global oil and gas industry.

The review of government’s initial Production Sharing Contract, PSC, for deep water fields is part of the provisions of the draft Petroleum Industry Bill, currently before the National Assembly for consideration.

Speaking in New York at the 3rd Nigeria Investment Summit, held under the auspices of the African Business Roundtable, Mrs. Alison-Madueke said: “I like to state once again that the proposed increase of government take to about 73 percent is not only competitive but considerate when we look at the scale of other entities around the world like Norway, Indonesia and even Angola, with even higher government take.”

Mrs. Alison-Madueke explained that based on prevailing realities in the global oil industry, it was only natural to review the terms of the PSC to reflect the current trend.

The novel 1993 PSC agreement was based on $20 per barrel price for crude oil real time, but records indicate that since the start of production in the PSC fields, crude prices had been on the upswing and hence the consensus to have a review of the terms.

The minister also said the new PIB provided for a refreshing fiscal regime with strong incentives for enhanced exploration of new frontiers, especially in the Inland Sedimentary Basins, as well as providing strong support base for complete activation of the Gas Master Plan.

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  • It would appear the Nigerian government has failed to carry the IOCs along in its reform drive. Yesterday at a Symposium on the PIB organised by the Petroleum Club, Mr. Mark Ward, president of the OPTS and managing director of Mobil Producing faulted the provisions of the PIB noting that if passed in its current form, there would be no investment in Nigeria’s oil and gas exploration and production. While we agree that it is within the rights of the Nigerian government to review existing laws to suit its aspirations, it is equally important to note that no nation is an island. Non-passage of the PIB in the last 4 years has denied Nigeria’s hydrocarbon industry of any significant investment and politicians busy themselves grandstanding.