Kachikwu: Nigeria Lost $60bn to Non-enforcement of PSCs with Oil Majors

Nigeria lost close to $60 billion to the non-enforcement of the terms of the Production Sharing Contracts (PSCs) signed between the federal government and the international oil companies (IOCs) in 1993, the Minister of State for Petroleum, Dr. Ibe Kachikwu, has said. The 1993 PSC provides that royalties paid by the IOCs on oil blocks located in deep water should be reviewed upward when crude oil price exceeds $20 per barrel. Unlike in a joint venture arrangement where the Nigerian National Petroleum Corporation (NNPC) and the IOCs contribute the production costs in the ratio of their stakes in the JV companies, only the IOC in a PSC bears the exploration and production costs, and recovers the costs if oil is discovered in commercial quantities, otherwise it loses its investments.

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