The Minister of State for Petroleum, Dr. Ibe Kachikwu, has said that Nigeria lost close to $60 billion to the non-enforcement of the terms of the Production Sharing Contracts (PSCs) signed between the federal government and the international oil companies (IOCs) in 1993, THISDAY reports.

The 1993 PSC provides that royalties paid by the IOCs on oil blocks located in deep water should be reviewed upward when crude oil price exceeds $20 per barrel. In all the five deep water oilfields that came on stream between 2005 and 2010 – Shell’s Bonga, ExxonMobil’s Erha, Chevron’s Agbami, and Total’s Akpo and Usan fields, the IOCs paid zero royalties to the federal government for these prolific fields. This arose largely as result of the fact that the PSC provided that for water depths of above 1,000 metres, the royalty to be paid is zero and all of the fields were in water depths above 1,000 metres.

However even though the PSCs also stipulated that the royalties shall be reviewed upwards when oil price exceeds $20 per barrel, the federal government did not take advantage of this provision to enforce the review. At the just-concluded 2017 conference of the Nigerian Council of the Society of Petroleum Engineers (SPE), Kachikwu stated that close to $60 billion was lost as a result of non-review of the PSC terms. He blamed the country’s lack of commitment to enforce the PSC terms on the failure of some people to do their jobs. He pointed out that there were a lot of inefficiencies in Nigeria’s oil and gas sector, which had benefitted all the stakeholders, including the IOCs.