No fewer than 23 oil blocks managed by both international and local oil companies, which are under crude oil Production Sharing Contracts with the Nigerian National Petroleum Company Limited, failed to produce crude or were inactive, the Federal Government has said.
PSC is an arrangement or contract where the contracted oil company undertakes to fund operations to explore, develop and produce petroleum within a concession area, under an Oil Prospecting License and for an agreed number of years.
If the effort is successful, the company will be subject to pay Petroleum Profit Tax, royalty and other bonuses/levies to the government. The company is entitled to recover its costs, in-kind, through what is known as ‘Cost Oil’.
The company also pays PPT and royalty in-kind, through the NNPC’s arrangement of lifting of crude oil and gas for tax, royalty and share of profit oil (usually shared in a predetermined ratio), for sale and remittance to designated accounts.
