03 Dec Deep Offshore and Inland Basin Production Sharing Contract Act: The Amendment Bill 2019
The President of Nigeria, Muhammadu Buhari on 4 November 2019, signed into law, a Bill to amend the Deep Offshore and Inland Basin Production Sharing Contract Act (DOIBPSCA).
The DOIBPSCA regulates the operations of oil and gas companies operating under production sharing contracts (PSCs) in the Deep Offshore and Inland Basin. The Act gives effect to certain incentives granted to oil and gas companies operating under PSCs in the Deep Offshore and Inland Basin areas of Nigeria which includes reduction in the petroleum profit tax rate, lower royalty, tax rates, investment tax credit or investment tax allowance, etc.
The new amendment is aimed at increasing government oil revenue. This was necessitated by the provision of section 16 of the DOIBPSCA which provides for the incentives to be reviewed where the price of oil exceeds US$20 per barrel or in any event after 15 years from inception and every 5 years thereafter.
We have provided below, a summary of the relevant changes:
- Incremental royalty rate based on the price of oil
- Periodic review of the PSC arrangement every 8 years
- A strict penalty regime for defaulters