President Muhammadu Buhari has signed the amended Deep Offshore and Inland Basin Production Sharing Contract (PSC) Bill into law.
The law will significantly increase Nigeria’s share of earnings earned from the country’s offshore oil wells.
Nigeria’s National Assembly approved the bill a fortnight ago and submitted it to the president for the final assent which sees it become law.
This afternoon I assented to the Bill amending the Deep Offshore (and Inland Basin Production Sharing Contract) Act. This is a landmark moment for Nigeria; let me use this opportunity to thank the National Assembly for the cooperation that produced this long overdue amendment.
— Muhammadu Buhari (@MBuhari) November 4, 2019
The president, who is currently out of the country on a diplomatic assignment in London, United Kingdom, announced the signing of the law through a post on his official Twitter handle this afternoon.
“This afternoon I assented to the Bill amending the Deep Offshore (and Inland Basin Production Sharing Contract) Act. This is a landmark moment for Nigeria; let me use this opportunity to thank the National Assembly for the cooperation that produced this long-overdue amendment,” the president said on Monday.
The Deep Offshore and Inland Basin Production Sharing Contracts Act was first enacted on March 23, 1999, with its commencement backdated to January 1, 1993.
However, that agreement has been the subject of dispute between the government and the international oil companies (IOCs) for some time now. The government had highlighted the need to review the law to reflect current realities but the IOCs were not so keen.
Section 16 (1) of the Deep Offshore and Inland Basin Production Sharing Contracts Act Cap. D3. LFN 2004 spelled out the conditions under which the PSCs should be reviewed.
According to the provisions of the Act, the law shall be subject to review to ensure that if the price of crude oil at any time exceeds USD 20.00 per barrel, the share of the revenue to the Nigerian government shall be adjusted under the PSC.
The need for the adjustment of the sharing formula was to ensure that the Production Sharing Contracts shall be of significant economic benefit to the government of the federation.
Just recently, the federal government, through the Office of the Attorney General of the Federation and Minister of Justice, Abubakar Malami, has been talking to IOCs and exploring other legal channels to bring about the recovery of over USD 62 Bn in arrears allegedly owed by the IOCs — the amount that should have accrued to Nigeria over the years since the price of a barrel of oil crossed the USD 20.00 mark.