Nigeria and Shell begin Oil Contract Renegotiations

This should be interesting oil contract negotiations, in a country renown for its lack of corruption and transparency.

Nigeria and Royal Dutch Shell begin contract negotiations

Nigeria has begun renegotiating oil contracts with Royal Dutch Shell that could lead to major energy companies generating billions of dollars less in revenues from lucrative offshore blocks in Africa’s largest producer.

“We’ll be looking to better terms than the previous [production-sharing contracts],” Emmanuel Ibe Kachikwu, minister of state for petroleum, said. “We would like to get better packages.”

Nigeria has several types of contracts with energy majors including joint ventures for onshore blocks, in which the government has an equity stake, and production-sharing agreements for the deepwater ones.

The state signed production sharing contracts in the early 1990s with companies including Shell, France’s Total, Norway’s Equinor, Italy’s Eni and ExxonMobil of the US. Nigeria produces 1.8m barrels a day of oil.

Mr Kachikwu said the old agreements favoured the foreign companies, giving them as much as 80 per cent of the oil that was produced after costs — known as profit oil — against the 20 per cent for the state.

... "The Shell model, when they finish, will then be the basis of what we do with all other PSC contractors,” he said.

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This will not end well for any of the players. 

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59 minutes ago, Douglas Buckland said:

This will not end well for any of the players. 

Heh heh, you took the words out of my mouth.  I obliquely implied this in my first sentence:

2 hours ago, Tom Kirkman said:

This should be interesting oil contract negotiations, in a country renown for its lack of corruption and transparency.

 

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