NNPC Advocates Increase Oil Royalty
As part of efforts aimed at ensuring that the federal government optimise the collection of royalties and other revenue in deep water oil production activities, the Nigerian National Petroleum Corporation (NNPC), yesterday proposed some key amendments to the Deep Offshore and Inland Basin Production Sharing Contract (PSC) Act.
The Corporation made the proposal while making a presentation to the Joint House of Representatives Committees on the amendment of the PSC Act and an Act to establish the National Oil and Gas Museum and Research Centre in Oloibiri.
According to the NNPC chief operating officer, Upstream, Malam Bello Rabiu, it is imperative to effect increment in royalties across all categories to increase government take.
“It is our opinion that the proposal to increase the royalty rate for terrains beyond 1000 metres, from zero per cent to three per cent, is commendable but it is necessary to also make corresponding adjustments in other categories,’’ he said.
Under the proposed PSC royalty regime, the calculation of what is due to government shall be based on production and price to guarantee fairness and balance between PSC contractors and Government.
For royalty based on production within a tranche of 50, 000 barrels of crude per day, the NNPC is proposing a royalty tranche rate of 8.0 per cent.
Under a production tranche of 50, 000 to 100, 000bopd, the royalty tranche rate would increase to 15.5 per cent and would escalate to 28.0 per cent once the production surpasses the 100, 000 bpd mark.
To calculate royalty based on price, NNPC proposed that under a $50 per barrel price regime, the tranche incremental royalty rate shall be zero per cent but the rate would increase to 0.30 per cent if the price hovers between the $50 to $100 mark.