Nigeria has begun renegotiating oil contracts with Shell.

According to Minister of Petroleum, Emmanuel Ibe Kachikwu, the government is looking for better terms than were seen in the previous PSCs with the international oil firm.

Nigeria has several types of contracts with energy majors including JVs for onshore blocks, in which the government has an equity stake, and production-sharing agreements for the deepwater blocks.

The state signed production sharing contracts in the early 1990s with companies including Shell, France’s Total, ENI, and ExxonMobil. Kachikwu said the old agreements favored the foreign companies, giving them as much as 80% of the oil that was produced after costs — known as profit oil — against the 20% for the state.

“That is a non-starter,” the Minister said. “It’s got to be better.”

Selected by SPTEC Advisory from Petroleum Africa