Deep Water Oil: NNPC Proposes Increased Royalties, Revenue

Nigerian National Petroleum Corporation (NNPC) has proposed legal amendments aimed at enabling the government to increase royalties and other revenues from deepwater oil production.
Nigeria, an OPEC member, has been hit by a slump in crude oil prices in the last two years there pushing the nation’s economy into recession.
This situation has been complicated by sustained militancy in the oil-rich Niger Delta as aggrieved militants continue to destroy oil installations.
As a result of this, oil production has continued to record reduction.
The proposed amendments relate to the Deep Offshore and Inland Basin Production Sharing Contract (PSC) Act.
According to the corporation, what was due to government should be based on production and price so as to guarantee fairness and balance between PSC contractors and government.
In a presentation to the lower chamber of the National Assembly, NNPC’s Chief operating officer, Upstream Operations, Bellow Rabiu, said the current graduated royalty scale should be removed.
He said: “it is our opinion that the proposal to increase the royalty rate for terrains beyond 1000 metres, from zero per cent to three per cent, is commendable but it is necessary to also make corresponding adjustments in other categories”.
The Corporation further said the Minister of Petroleum should have the powers to intermittently set royalties payable for acreages located in deep offshore and Inland basin production sharing contracts.
It proposed that some incentives should be removed, including the investment tax credit, investment tax allowance and capital allowances to PSC contractors.