On 4 November 2019, the Nigerian President assented to the Deep Offshore and Inland Basin Production Sharing Contract (Amendment) Bill 2019. The amended bill reviews the regulation of deep offshore oil fields in Nigeria.
Four (4) proposed changes to the Principal Act
- First (Amendment of Section 5): Substitution of production-based royalty system with a dual arrangement of field-based and price-based royalty;
- Second (Deletion of Section 16): No more change in revenue payable to the FG from production sharing contracts (PSCs) when the price of crude oil is higher than $20 per barrel;
- Third (Insertion of a new Section 17): The Minister of Petroleum Resources will allow the Nigerian National Petroleum Corporation to call for a review of the PSCs every 8 years;
- Fourth (Insertion of a new Section 18): Penalty for non-compliance with the provisions is at least NGN500 million or 5 years imprisonment or both, upon conviction.
The new penalty and progressive royalty rates imply more revenue for the government and additional costs for covered companies. BRC’s comparison of the 2004 Act and 2019 Amendment Bill is available here.
The Petroleum Industry Act (PIA) 2021 provides the governance, administrative and fiscal framework for the petroleum industry in Nigeria. Upon the successful conversion process to the provisions of PIA 2021, the Deep Offshore and Inland Basin Production Sharing Contract Act 2019 will be repealed.
Updated: 8 September 2021