Nigeria Deep Offshore Inland Basin Production Sharing Contract Acts: Evaluating Contractor’s Take

Abstract

Value-focused thinking is often designed to focus decisions on the essential activities that must occur prior to solving a decision problem. This approach was adopted by the Nigerian government in the fiscal legislation for Deep Offshore and Inland Basin Production Sharing Contract (DOIBPSC) Act enacted in 1999 and the subsequent amendment of 2020 version. One major item of interest in the amended Act is the introduction of royalty by price to enable the government to capture windfall in high oil price spike. This study evaluates the new fiscal regime to ascertain its attractiveness and impact on contractor take. Four features (royalty, cost recovery, tax oil, and profit oil) of the PSC contract terms were used to determine contractor and government takes from the transactions. This study adopted the full range of oil prices captured in the amended DOIBPSC Act in addition to the current market price of oil estimation.