- For detailed early history of oil production in Nigeria see Schatzl, Petroleum in Nigeria, (Nigerian Institute of Social and Economic Research (NISER), Ibadan 1969), especially pp. 1–4.
- This Company made the first offshore discovery of petroleum in 1964 in the Okan Structure, Bendel State.
- Shell holds 232 licenses out of a total of 324. See table in L.A.O. Amu, A Review of Nigeria's Oil Industry, NNPC Publication.
- One of such laws is the Petroleum Profits Tax Act of 1959 which, by an amendment in 1975, imposes tax and royalty rates of 85 per cent, and 20 per cent, respectively.
- S.2, Petroleum Decree 1969.
- See Sched. 1, ss.3, 6 and 10 for duration. Petroleum Regulations, Reg. 2, for maximum areas. The rights are for one year, five years and 20 years and are over areas of 5,000, 1,000 and 500 square miles respectively.
- See S.8 of Sched. 1.
- See S.9. It is uncertain whether the company, after being granted a mining lease, is under an obligation to continue to produce over 10,000 barrels a day. There is an operator which has been lifting less than 10,000 barrels for the last few years.
- See Reg. 15.
- See G. Etikerentse, “The Impact of 1978 Land Use Act on Land Acquisition Compensation,” (1984/85) 3 Oil and Gas Law and Taxation Review 72 for a discussion on this topic.
- See M. Olisa “Legal Framework for Pollution Control” in The Petroleum Industry and the Nigerian Environment (1983, NNPC/Thomopoulos Environmental Consultants, Lagos).
- See Reg. 43.
- L.A.O. Amu “Energy Policy for Nigeria.” See Vol. No. 3 Third Quarter 1983 (NAPET-COR). This is the quarterly magazine of the NNPC. Mr. Amu was at that time Managing Director of NNPC.
- Several OPEC countries have general conservation rules for lengthening the life of oil fields and exploiting them according to sound technical methods, e.g. Libya, Venezuela, Kuwait, Iraq. There were also political restraints on production imposed by countries such as Saudi Arabia, Iran, prior to the ceiling currently imposed by OPEC on her member states.
- See Petroleum Economist (April 1983) at p. 118; (August 1983) p. 301.
- Notably Resolutions XVI. 90 and XXIV. 135 of 1971. These resolutions are in line with expressions of sovereignty as contained in the 1962 United Nations Declaration on Permanent Sovereignty over Natural Resources, which allows nationalisation on grounds of “public utility, security or the national interest.”
- Federal Ministry of Finance, Report of the Fact-Finding Mission on Petroleum Taxation. Problems affecting Petroleum Revenue and Miscellaneous Matters on the Petroleum Industry (1969). See also Terisa Turner, “Nigeria: Imperialism, Oil Technology and the Comparador State,” in Nore-Turner, Oil and Class Struggle (Zed Press, 1980), p. 208 and n. 16, p. 221.
- Terisa Turner, at p. 209.
- By Decree No. 18 of April 1971.
- Under the Nigerian National Petroleum Corporation Act, 1977. On the establishment and organisation of NNPC see M.M. Olisa, Nigerian Petroleum Law and Practice (1987, Fountain Books, Ibadan), p. 181 onwards.
- This was in return for the governments agreeing to the reopening of certain oilfields after the Civil War—See OPEC Member Country Profiles OPEC Secretariat May 1983 p. 83. 33 per cent, participation in Agip/Phillips concessions were acquired that same year.
- Mobil signed in June 1983, Gulf signed at the end of 1984, and Agip signed early in 1985.
- See M.M. Olisa, supra n. 20 pp. 83–93.
- For a more detailed analysis see 1. Omorogbe “Contractual Forms in the Oil Industry: The Nigerian Experience with Production Sharing Contracts” Vol. 20, 1986 J.W.T.L. 342.
- However, where the equipment has been leased belonging to foreign third parties, such equipment does not becomc NNPC property, and it may freely be exported from the country.
- See Petroleum Legislation Supplement 35, p. 50.
- Ibid. p. 51.
- According to the contractual terms, cost oil was originally 40 per cent, but was increased to 50 per cent, by a revision made retroactive from 1977.
- See Sasegbon, “Current Developments in Oil and Gas Law Nigeria—with Comparative Analysis with other African Oil producing countries,” International Bar Association Energy Law 1981, Vol. 1, atp. 371.
- The Contractor is normally reimbursed for this. See F. Santos-Alvite “Setting the Legal framework for OPEC oil contracts,” December 1983/January 1984 OPEC Bulletin p. 8 at p. 11. See also S.K.B. Asante, “Restructuring Transnational Mineral Agreements” Vol. 73, 1979 A.J.I.L. 335 at p. 364. Also P. Mlotok, The Oil Industry in the Far East:—Indonesian Oil and Gas (Salomon Brothers, 1984), p. 4.
- See F. Santos Alvite, supra n. 30. Also Barrows, World Petroleum Arrangements (1982) at p. 255.
- There are however two deep offshore blocks and one onshore block operated by Agip which are in very difficult terrain, all of which have an exploitation option by which a commercial discovery in any of the blocks will automatically lead to a production sharing contract.
- These forms of petroleum contracts are also called operation, work, or risk contracts.
- It would appear that the government was aware of the PSC's shortcomings long before the Crude Oil Sales Tribunal as a letter circulated to prospective service contractors and signed by the Managing Director, NNPC seems to prove. In this letter contractors are requested to state detailed answers concerning their mode of operation—in short to bid competitively for the areas in question.
- Elf recently relinguished three of its Contract blocks located in Sokoto; see Petroleum Economist (March 1985) p. 83.
- See M.M. Olisa, supra n. 20, at p. 100.
- See Sasegbon supra n. 29, at p. 371.
- Production sharing contracts are essentially regarded as variants of service contracts.
- See S.K.B. Asante supra n. 30, at p. 364.
- Party X (the Seismic crew) undertook a contract job for Phillips Oil Company in 1981, according to a pamphlet published by the NNPC, Spotlight on the Nigerian National Petroleum Corporation and the Oil Industry in Nigerian Exploration and Exploitation. There is also a Party Y which was established in 1984.
- See also a paper by Martin Olisa, “The Role of the NNPC in the Nigerian Oil Industry,” presented at the national Workshop on Petroleum Law held in 1984 at the University of Lagos. However, a further—perhaps major-reason is the lack of funds for production. See Petroleum Economist (March 1984) p. 62.
- For a more detailed exposition on natural gas in Nigeria, there are several sources, for example, Ogunsola, “Comparative Economics of Natural Gas Industry,” (1984) NAPET-COR (Magazine of the NNPC) 3 at p. 9; A. Fanoiki, “Nigerian Gas Resources as an Alternative Source of Energy,” paper presented at Conference on Petroleum Law, Lagos, 1984; Y. Omorogbe “An Appraisal of Nigeria's Natural Gas Legislation” (1985/86) 2 OGLTR 51. For an international outlook see for example Christopher Tugendhat and Adrian Hamilton, Oil: The Biggest Business (Methuen, London 1975) Chap. 29, at p. 353.
- Natural gas may be found either on its own or in a reservoir also containing crude oil. Natural gas of the former type is known as dry gas or unassociated gas. The gas found in conjunction with crude oil is associated gas.
- Only approximately 30 per cent, of the crude oil in an oil reservoir is ultimately recovered by use of known oil recovery methods.
- See Isichie and Sanford, “The Effects of Waste Gas Flares on the Surrounding Vegetation in Southeast Nigeria,” (1976) 13 J. App. Ecol. 377. Also Nwangwu and Okoye, in The Petroleum Industry and the Nigerian Environment, M.P. 164 proceedings of an International Seminar sponsored by the NNPC (Nigerian National Petroleum Company) in 1981, published by Thomopoulos Environmental Pollution Consultants (1983)).
- See A. Samuel, “Drilling for Oil Onshore: The Planning Law Problems,” [1981] J.P.L. 233 at p. 242.
- See Tiratsoo, Oil Fields of the World, (Scientific Press Ltd., 1976), esp. p. 62.
- See Petroleum Economist (August 1983) 301 at p. 302. Small amounts of natural gas are used for electricity generation, The Ajoakuta Steel Plant, Aladja Steel Company and some private companies also make use of natural gas—see M. Olisa, “The Role of the NNPC in the Nigerian Oil Industry,” paper presented at The National Workshop on Petroleum Law, University of Lagos, 1984.
- This does not include production sharing and service contracts where natural gas is specifically excluded from the contract provision. In the leases and concessions the Company is granted rights to the “petroleum” located within the lease area.
- See G. Etikerentse, Nigerian Petroleum Law (1985, MacMillan) p. 115 where the various interpretations are discussed.
- This means that gas may be flared if the volume of gas produced is small in relation to the distance to a possible utilisation point, and it is not technically advisable to inject the gas into the reservoir.
- See Petroleum Economist (January 1985) at p. 21: Y. Omorogbe, supra note 24, at p. 53.
- This penalty has already been effected but has no formal legal basis. The penalty is the liability of the operating company and NNPC will not contribute.
- One owned by Mobil and commissioned in 1978, and the gas re-cycling plant at Obiafu Obrikom, Rivers State.
- See section on Operating Agreements above.
- See “Nigeria: Tough Policy Boosts Revenues” Petroleum Economist (March 1985) 81 at p. 83.
- M.S. Olorunfemi, “Managing Nigeria's Petroleum Resources,” (December/January 1986) OPEC Bulletin 24 at 25–26. Mr. Olisa, Legal Manager NNPC, says the same in substance—see M.M. Olisa Nigerian Petroleum Law and Practice (1987 Fountain Press Ibadan) p.1.
- Prior to this a “Think Tank” was organised in 1978 by the National Policy Development Centre. The Conference theme was “Towards a Comprehensive Energy Policy.” Several of the speakers realised the short-comings of the Nigerian attitude to natural resources and the problems involved. See E.N.C. Osakwe (Ed, Towards a Comprehensive Energy Policy for Nigeria (National Policy Development Centre (Think Tank) Supreme Headquarters, Lagos, 1978).
- Although the then Minister for Petroleum, Professor Tam David-West announced that work on a “comprehensive and integrated” national energy policy was nearing completion and that the plan would be announced shortly.
- See T. David-West, “The Outlook for Nigeria's Oil Policy” a paper presented at a conference on oil and Money strategies, and published in (1984) 5 NAPETCOR, p. 5. The only reference to technology and manpower is contained in the Minister's sentence.
- Y. Omorogbe, supra n. 24, at p. 347.
- See Terisa Turner supra, note 17 at p. 200 Oil arid Class struggle, Zed Press 1981 200. Ms Turner argues, using the Nigerian framework, that the state often besets the acquisition of technology and the development of indigenous knowhow. Therefore technology transfer is first and foremost a political problem.
- See Barrows, World Petroleum Arrangements (1980) pp. 7–10 for a brief survey of the Algerian legal framework.
- See World Petroleum Arrangements (1982) at pp. 121–128.
- It should be noted that those terms are similar to those contained in the Nigerian service contracts. Nationalisation is not even advocated by this writer at present, who feels that without any technological base, and with little developed manpower, it would prove unsuccessful, and a similar fate to Chile's would befall the state.
- See Zakariya “State Petroleum Companies” 1979 12 J.W.T.L. 485. Also M.S. Al-Otaiba OPEC and the Petroleum Industry (Croom Helm, 1973) at p. 52. Pierre Terzian OPEC. The Inside Story (Zed Books Ltd, 1985), Chapter 1.
- See OPEC member country profiles, OPEC Secretariat (1983) 135 from p. 139 for the history of the oil and natural gas industry in Venezuela. By contrast Nigeria gave out concessions lasting for long periods, up until the commencement of the 1969 Decree.
- The technical assistance agreement is a highly significant contractual form under which the oil company is engaged to provide technical services for a specified fee, without any propriety interest in the production of the enterprise is closely controlled in theory by the state government. This type of government is potentially the best for increasing technological knowhow although it is of little financial benefit in the beginning. It can thereby be regarded as one of the ways through which more technology can be acquired as an aspiring developing country. See Asante supra, note 30 at pp. 367–368, where technical assistance agreements are examined.
- See Alternative Arrangements for Petroleum Development UN Centre for Transnational Corporations supra, n. 66, at p. 10: M. Zakariya, 486–487; M. Tanzer, “Oil Exploration Strategies: Alternatives for the Third World” in Nore-Turner, supra n. 17, at p. 93.
- See M. Tanzer (supra note 69) at pp. 90–91.
- See Alternative Arrangements for Petroleum Development, supra n. 68 at p. 56.
- See M. Tanzer, supra n. 69 at p. 91. Direct state operations are dealt with in great detail in this article.
- In 1977, companies were given a package of petroleum tax incentives, including a reduction of the tax rate on companies engaging in exploration but not yet producing, from 85 per cent. to 65.75 per cent. In 1982 the companies were relieved of the obligation to supply on a pro rata basis, 30 per cent of the 250,000 barrels per day required for domestic market. Prices of such supplies were below world market rates. Again as from January 1, 1986, the fiscal regime has been modified to ensure that each oil producing company realises not less than 2 U.S. dollars profit per barrel. This is in return for carrying out specified exploration and production programmes. See M.M. Olisasupra n. 20, pp. 174–179.
Journal of Energy & Natural Resources Law
Volume 5, 1987 - Issue 4