Nigeria Extractive Industries Transparency Initiative, NEITI, yesterday, stated that oil and gas companies were fleecing Nigeria, over the country’s failure to review Deep Offshore and Inland Basin Production Sharing Agreement, also known as Production Sharing Contracts, PSC, between Nigeria and oil companies.
NEITI, in a statement in Abuja, disclosed that in the early years after the signing of the agreement, PSCs were contributing less than one per cent of the country’s crude oil production, but from 2012 till date, companies under the PSCs, sensing the Federal Government’s reluctance to review the agreements, had stepped up production to over 40 per cent of Nigeria’s output.
NEITI said its major concern was that now that the PSCs account for about 50 per cent of total oil production and major source of revenues, the delay or failure to review and renew the agreement means that payment of royalty on oil production under PSCs would not be made while computation of taxes would be based on the old rates.
It said, “In an Occasional Paper released by NEITI which reviewed three years of NNPC’s financial and operations reports, NEITI has noted that crude oil production under the Production Sharing Contracts (PSCs) has since overtaken production under the Joint Venture arrangements.
“A careful look shows that Production Sharing Contracts (PSCs) accounted for 44.8 per cent of total oil production while the Joint Ventures (JVs) contributed 31.35%.
“A historical analysis of this development by NEITI shows that JV Companies accounted for over 97 per cent of Production in 1998 while PSCs contributed only 0.50 per cent. This trend continued until 2012 when PSCs accounted for 37.58 per cent while JVs contributed 36.91 per cent.