Define the scope of disclosure. Full-text disclosure is the most effective way to reap the benefits of public procurement. Contracts usually have several related clauses and sub-clauses. Upstream. There are five different types of contractual arrangements under which companies conduct exploration and production activities in more than 160 licence areas: joint operating agreements, production sharing contracts, service contracts, single risk contracts and marginal land agreements. For each of them, the government should publish the main contract document, all annexes, amendments made as they are made and other related documents, including environmental and social documents. Oil contracts in Nigeria are basic documents that establish the legal framework for oil and gas projects. A new report from NRGI determines why these contracts should be disclosed, what kind of documents should be published, and how the government can implement it. There are four different types of oil deals operating in the Nigerian oil and gas industry. This agreement preserves the contractual framework within which the Nigerian National Petroleum Corporation conducts oil operations in Nigeria on behalf of the Nigerian government and multinational oil companies. The petroleum agreement includes a Joint Operating Agreement (JTA), a Production Sharing Agreement (PSC), a Service Contract (SC) and a Memorandum of Understanding (MOU). Because they said they would.
Since 2015, the Nigerian government has made several public commitments to the publication of oil contracts. This includes a public statement by the Minister of State for Petroleum Resources in 2015; a commitment at the 2016 UK Anti-Corruption Summit; a commitment in 2016 in 7 Big Wins; the short- and medium-term strategy of the Federal Ministry of Petroleum Resources; and a commitment under the Open Government Partnership National Action Plan 2017. Because the current arguments against contract transparency are myths, not facts. Our analysis of Nigerian contracts shows that standard confidentiality clauses in Nigerian contracts are not barriers to publication if the Nigerian government wants to make disclosure of contracts mandatory. While it used to be common to keep contracts secret, times are changing. More than 40 countries have now disclosed extractive industry treaties, and 22 have laws requiring disclosure. Because the transparency of contracts would bring significant benefits. Oil contracts contain an enormous amount of important information to which citizens, as co-owners of these resources, are entitled. These include tax conditions such as taxes, royalties and production shares, which can have a huge impact on public finances; operating and production obligations that may affect investment income and government revenues; environmental commitments that may be of national and local significance; and social obligations, including infrastructure, local content and consultation requirements.
Downstream. Although there is a wide range of intermediate and downstream topics for which there are significant contractual relationships, our analysis focuses on negotiation contracts. In this area, the government should disclose crude oil futures, spot sales contracts, intercompany contracts, direct sales of crude oil and direct purchase of refined products, as well as domestic and export sales contracts for natural gas feedstocks, natural gas liquids and refinery products. Other areas where important contractual relationships require increased transparency include refining, product sales and oil imports. Make contracts accessible. The government should set up a contract web portal that allows users to search for contracts by company, project and also by geographical area. Good examples of this type of portal have been developed by a number of countries, including Mexico, the Philippines and Ghana. Each party to the joint venture shall have an undivided interest in the capital, risks and liabilities arising from the joint venture activities with the NNPC. In Nigeria, 71% of upstream oil and gas investments are spent under alliance or joint venture agreements. The Nigerian government, through the NNPC, holds approximately 60% of the stakes in all joint venture agreements.
Traditional joint ventures are the most favorable in terms of participation in oil and gas projects because they affect the economic rent derived from contracts. In addition, joint ventures with private foreign capital will be encouraged in Nigeria, in the hope that the technology will improve the efficiency of the use of domestic oil inputs and increase the flow of interconnection of resources. The private sector is also joining us. A recent survey of 40 major oil and mining companies found that 18 of them have made public statements in favor of some form of contract transparency. These include Total, Statoil, BP and Shell, all of which have major offices in Nigeria. Other major oil companies operating in Nigeria have allowed their contracts to be disclosed in other countries, including Chevron (Liberia), ENI (Mozambique) and ExxonMobil (São Tomé and Príncipe). Over the years, Nigeria, like many other countries, has faced the challenge of adopting a treaty that serves both its own interests and those of the international oil companies (IOC). Although Nigeria has managed to accept some contracts that allow it to exploit its oil and gas reserves and ensure that IOCs get a return on their investments, it has not been able to maximize its revenues. This is partly due to poorly worded tax and environmental clauses in the treaties.
This article analyzes the types of oil and gas contracts adopted in Nigeria. Why should the Nigerian government issue oil contracts? When contracts have been caught up or entered the public space, an independent analysis has made it possible to identify the problematic provisions of the Treaties and has led to much-needed reforms. .