Nigeria endangers IOC interest for quick fiscal fix

The government’s revision of PSCs to seek more revenue from oil majors will backfire if it prompts them to reevaluate their portfolio investment priorities

The latest move by Nigeria to raise revenue from the oil industry, a law constituted in record time in November, could add up to $1.5bn to the government’s coffers over the next two years but quickly backfire in subsequent years, say participants in the country’s oil sector.  Nigeria’s President Muhammadu Buhari gave executive assent to a bill amending the 1993 Deep Offshore and Inland Basin Production Sharing Contract (PSC), with the aim of increasing the governments revenue from oil production.  Before the amendments, royalties ranged from 0pc to 12pc based on the water depth of the field. The new law eliminates the 0pc rate and royalties are calculated on a basis dependent on the chargeab