Nigeria secures better sharing of oil revenues

The Nigerian presidency announced on Monday that it has signed an amendment to the oil law, which plans to increase its share of revenues compared to foreign oil companies, and promises a « better distribution » of oil revenues for Africa’s largest producer. .

« Nigeria will now obtain a fair and equitable share of natural resource revenues, for the first time since 2003, » said President Muhammadu Buhari, after the signing of the amendment, voted by the National Assembly.

« Nigerian politicians, with the complicity of multinational oil companies, have worked to maintain a system of income distribution, evaluated at its minimum, calculated on a barrel of oil at $ 20 – three times less than its current price » said the Nigerian head of state.

The announcement comes as Nigerian Justice Minister Abubakar Malami claimed $ 62 billion in foreign oil companies in mid-October, arguing that under the law, offshore oil extraction was undervalued and prices much lower than those of the market.

Indeed, the law passed in 1993 provides for the adoption of « production sharing contracts », which stipulates that the government and the majors can negotiate their income shares when the price exceeds $ 20 a barrel, a price that is evaluated by the government and is no longer in line with the reality of the market.

1.5 billion dollars, but difficult economic context
The new amendment provides for the payment of royalties, calculated on a fixed basis according to changes in the price of a barrel or the depth of the well, but it was unclear whether these provisions applied retroactively.

According to the presidential statement, this amendment could bring in $ 1.5 billion to the country by 2021.

In Nigeria, most of the crude is mined by five majors: the Anglo-Dutch Shell, the French Total, the Americans Chevron and ExxonMobil, the Italian Eni. They operate in partnership with the national oil company (NNPC).

Foreign oil companies have slowed their investments, particularly in offshore areas, because they believe the volatility of Nigerian economic policies and the opacity of the system have slowed.

But Nigeria is in a difficult economic environment, weighed down by the drop in oil prices and oil production stagnant at 1.86 million barrels per day (mbd), despite a production capacity estimated at 5 mbd.