Deep Offshore and Inland Basin Production Sharing Contracts Act
Act · Energy
Policy date: 2019-01-01
An Act that governs production sharing contracts for oil exploration in deep offshore and inland basins, defining fiscal terms and government shares for cost recovery. It targets oil companies and the national petroleum corporation to manage high-risk operations. This attracts investment while ensuring Nigeria receives a fair share of revenues.
Deep Offshore and Inland Basin Production Sharing Contracts Act
What Is This Policy?
The legislation governing production sharing contracts (PSCs) for deep offshore and inland basin oil exploration and production in Nigeria, defining the fiscal terms, government share, and cost recovery provisions for these high-risk petroleum operations.
Who Does It Target?
International and national oil companies operating in deep offshore and inland basins Nigerian National Petroleum Corporation (NNPC) as the national oil company Federal Government revenue agencies Petroleum industry investors and analysts
What Does It Aim to Achieve?
Establish a fiscal framework that attracts investment in deep offshore and inland basin exploration while ensuring that Nigeria receives a fair share of petroleum revenues, particularly when oil prices rise above certain thresholds.
Key Features
Production Sharing Model: Oil produced is shared between the contractor and government based on agreed formulas Cost Recovery: Contractors recover exploration and development costs from production before profit sharing Price-Based Royalty: The 2019 amendment introduced royalties linked to oil price benchmarks and production volume Government Share Escalation: The government's share of production increases as cumulative production or oil prices rise Deep Water Fiscal Terms: Specific terms for water depths beyond 200 metres and inland basin operations
Current Status
Rollout Stage: Active with existing PSCs and new licensing rounds Coverage: Deep offshore acreage and inland sedimentary basins Lead Agency: Federal Ministry of Petroleum Resources / Nigerian Upstream Petroleum Regulatory Commission (NUPRC) 2019 Amendment: Restored price-based fiscal provisions that had been suspended since 1999
How to Access
Companies participate through licensing rounds and PSC negotiations. Apply for deep offshore or inland basin acreage during licensing rounds Negotiate PSC terms with the government Comply with fiscal and operational requirements throughout the contract period
Official Resources
Website: nuprc.gov.ng Contact: Nigerian Upstream Petroleum Regulatory Commission, Abuja
Legal Framework
The Deep Offshore and Inland Basin Production Sharing Contracts Act 1999 (as amended 2019) provides the fiscal framework for deep offshore oil PSCs. It operates alongside the Petroleum Industry Act 2021, the Petroleum Profits Tax Act, and the Nigerian National Petroleum Corporation Act. Constitutional authority derives from Section 44(3) of the 1999 Constitution vesting mineral resources in the Federal Government. The 2019 Amendment Act significantly revised royalty and profit oil terms.