The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Malam Mele Kyari, said on Tuesday the amendment of the Deep Offshore (and Inland Basin Production Sharing Contract) Act is long overdue.
Kyari also allayed the fears of International Oil Companies (IOCs) operating in Nigeria that the NNPC was committed to pushing legislation that would protect their investments in the country.
He spoke at the opening of the 37th Annual International Conference and Exhibition of the Nigerian Association of Petroleum Explorationists (NAPE) in Lagos.
President Muhammadu Buhari had on November 4, signed the Production Sharing Contract (PSC) Act which is a contractual arrangement for exploration and production of petroleum resources.
Under the Act, a contractor undertakes all the financial, technical and operational risks associated with petroleum operation in return for a share of profit in oil after payment of royalty, cost, and tax oil.
The new amendment introduced key changes including the introduction of incremental royalty rate based on the price of oil.
It also mandated a periodic review of the PSC arrangement every eight years with the government estimating that the move would help Nigeria generate an additional $500 million revenue in 2020.
The NNPC GMD said: “The amendment to the Deep Offshore Act was not unexpected because it was long overdue.
“The conditions to make changes to the act were met as far back as 2003 and so the industry expected this to happen.
“We have noticed the level of anxiety caused by the amendment but we believe that there is room for commercial conversation.
“As an industry, we must rally round the government to ensure the passage of legislatures that will put the industry forward.’’
Kyari maintained that investing in Nigeria remains a viable option for oil majors as the chances of finding oil was very high, especially in the Niger Delta region.
According to him, the theme of the conference: “Expanding Nigeria’s Petroleum Landscape: Digitisation, Innovation, and Emerging New Technologies,” was very apt and in line with current realities. (NAN)