30 April 2013, Lagos – Former super Permanent Secretary and Secretary for Petroleum, Mr. Philip Asiodu, has urged a re-negotiation of the fiscal terms in deep offshore Production Sharing Contracts, PSCs, between the Federal Government and the oil companies operating in the country.
He said this should be done even as the nation awaited the passage into law of the Petroleum Industry Bill, PIB, still in the National Assembly.
Asiodu, in his keynote address at the 6th annual Nigerian Association for Energy Economic, NAEE, international conference in Lagos, maintained that the PSCs executed in 1993 had three re-opener conditions which include the re-negotiation of the fiscal terms if the price of oil rose to US$20 per barrel; if mega discoveries were made of reserves above 500 million barrels and after 10 years of the first contract.
According to him, the US$20 per barrel threshold was reached in the year 2000, reserves of 500 million was achieved within seven years by a few consortia while the 10-year date of the first contract elapsed in 2003.
Asiodu said: “There is a suggestion in some government circles that decisions on auctioning of concessions blocks, renewal of Oil Mineral Leases, among others, must await the passage of PIB. This is a wrong approach.
“I can see no rational explanation for not negotbiating within the existing contracts to optimise Nigeria’s revenue up to the targets hoped for in PIB, while waiting for it to become law.”
“In the end, whatever the wishes of a nation in global competition to attract investment and partners in progress, it can only conclude internationally competitive contracts and must demonstrate a habit of respecting such contracts,” he added.
According to Asiodu, the problems bedevilling the nation’s oil and gas sector are the same problems which have over the years impacted negatively on all aspects of the national life.
Things will only begin to improve if the government and national leadership will undergo a revolutionary change and embrace all the aspects of good governance, he said.
“Eighteen months of sustained good governance will put Nigeria on irreversible path to wealth, stability and greatness,” Asiodu added.