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NNPC: PSCs Now Account for Most of Nigeria’s Oil Production

Most crude oil produced in Nigeria’s Niger Delta region now come from Production Sharing Contracts (PSCs), a recent report by the Nigerian National Petroleum Corporation (NNPC), has disclosed.

The NNPC in its monthly operations and financial report for September 2018, explained that that between August 2017 and August 2018, the volume of oil produced from PSCs fields were 310,424,845 barrels, while that from Joint Venture Agreements (JVA) were 245,537,573 barrels, indicating a difference of 64,887,272 barrels.

On the average, the report showed that oil output from PSCs operations amounted to 23,878,834.23 barrels per month and 770,284.975 barrels per day; while that of JVA was 18,887,505.61 barrels per month and 609,274.37 barrels per day.

PSCs and JVA oil production were closely followed by Alternative Financing (AF), which accounted for 102,162,516 barrels in the production-to-date (PTD) period, as well as the Nigerian Petroleum Development Company (NPDC) which also accounted for 51,018,207 barrels of oil within the review period.

In the same vein, marginal field operators and independents produced 55,739,537 barrels of oil within the period.

Recently, an audit report on the operations of Nigeria’s oil industry for the year 2016 by the Nigeria Extractive Industries Transparency Initiative (NEITI), had disclosed that PSCs had become the leading oil production arrangement in Nigeria because they are mostly offshore and less prone to production disruptions.

NEITI equally hinted that the development has now made it necessary for Nigeria to renegotiate the terms of the PSCs as stipulated in the Deep Offshore and Inland Basin Production Sharing Contracts Act of 1993 so as to increase government’s take from oil production therein.

The NEITI report had stated that: “A major highlight of 2016 was that for the first time in Nigeria’s history, crude oil produced from Production Sharing Contracts (PSCs) overtook output from the Joint Ventures (JVs).

“In 2016, PSCs accounted for 324 million barrels, while the JVs accounted for 289.1 million barrels, (as against the 320 million barrels for PSCs and 375.5 million barrels for JVs in 2015). PSCs, a production arrangement introduced in 1993, thus became the leading production arrangement in 2016.

“The PSCs are mostly offshore, thus insulated from vandalism and sabotage, and are not constrained by adequacy/availability of equity funding by the Federation. This change in production structure pushes to the fore the need to renegotiate the terms of the PSCs as stipulated in the Deep Offshore and Inland Basin Production Sharing Contracts Act of 1993 so as to increase government’s take.”

Similarly, the NNPC report for September stated: “A total of 61.90 million barrels of crude oil and condensate was produced in the month of August 2018 representing an average daily production of 2.00 million barrels. This represents an increase of 7.20 per cent in the average daily production compared to July 2018 average daily performance.

“Of the August 2018 Production, Joint Ventures (JVs) and Production Sharing Contracts (PSC) contributed about 32.27 per cent and 38.96 per cent respectively. While AF, NPDC and Independents accounted for 13.06 per cent, 7.02 per cent and 8.69 per cent respectively.”

SOURCE: Thisday