16 September 2015, Abuja – The Nigerian National Petroleum Corporation, NNPC, Tuesday, reiterated its resolve to, within the next couple of weeks, commence the review of the fiscal terms of its existing deep offshore Production Sharing Contracts, PSC, with some International Oil and Gas Companies operating in Nigeria.
Group Managing Director of the NNPC, Mr. Ibe Kachikwu, who disclosed this in a statement from the Corporation in Abuja, explained that the decision was borne out of the need to seek favorable benefits to Nigeria based on prevailing realities in the industry.
According to Kachikwu, who was speaking at the France-Nigeria Business Forum organized to mark the State Visit of President Muhammadu Buhari to Paris, France, some of the contracts were negotiated over 20 years ago and they have since been overtaken by new realities in the industry.
He stated that in the weeks and months ahead the NNPC would be re-negotiating the contracts to extract as much benefit as possible for Nigeria.
He noted that though the PSC agreements are firm contracts which should be adhered to, the NNPC is allowed to make use of the window which creates space for re-negotiation.
“We intend to begin the process of the re-negotiation of the PSCs to see what value chain and improvements we can have from these contracts,” he said.
He, however, noted that in carrying out a review of the existing PSCs, care must be taken not to create an anti-investment atmosphere as that may be counterproductive to the industry.
On the status of France-Nigeria relations in the oil and gas industry, Kachikwu noted that though the French have a firm presence in the Nigerian petroleum industry, there is still room for French companies to rev up their presence in the refining areas where Nigeria currently needs support.
“There is no country in Africa that has the kind of resource base Nigeria has; So France really needs to get more bullish if they want to compete in Nigeria with the very aggressive India, China, Germany … It’s a huge competition and I am looking forward to better days ahead,” he said.
On the ongoing reforms of the Nigeria oil and gas industry, the NNPC GMD stated that the global oil and gas community is showing unmatched excitement about the re-invigoration of the industry.
“There is a lot of interest in our quest to seek joint ventures across the value chain; there are huge potentials across board and all we need to do is to galvanize the efforts to get the best out of it,’’ he said.
Kachikwu noted that President Buhari’s vision for the industry is absolutely on track, stating that, “It is being honed every day: there is focus, transparency and diversified income streams.”
Kachikwu had about a month ago, initially announced plans to review all Production Sharing Contracts, Joint Venture Agreements and all other contracts between it and its various partners.
He had stated that the review would be undertaken to reflect current day realities in the global oil and gas industry.
Kachikwu also stated that under his watch, the NNPC would put in place mechanisms that would plug all revenue leakages in the upstream, midstream and downstream sectors, adding that all crude oil proceeds due for the Federation Account would be remitted accordingly.
He disclosed that the mandate given to him by President Muhammadu Buhari is to turn around the entire commercial processes and procedures of the NNPC in order to impact on the growth trajectory and operations of the corporation.