NNPC to review production agreement with oil companies

The Nigerian National Petroleum Corporation (NNPC) says it will revisit the fiscal terms of the existing Production Sharing Contracts (PSC) between the corporation and some international oil and gas companies with a view to seeking favorable benefits to Nigeria based on prevailing realities in the industry.

Speaking on Tuesday at the France-Nigeria Business Forum organised as part of the state visit of President Muhammadu Buhari to France, Ibe Kachikwu, group managing director of NNPC, disclosed that in the weeks and months ahead, the corporation will be re-negotiating the contracts to extract as much benefit as possible for Nigeria.

Kachikwu 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.

“Some of the contracts were negotiated over 20 years ago and they have since been overtaken by new realities in the industry.”

Kachikwu admitted 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, he said that although 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, he 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.

He maintained that President Buhari’s vision for the industry is “absolutely on track”, saying: “It is being honed every day: there is focus, transparency and diversified income streams.”