…when I googled the only information I got about any MoU was from the Oil and Gas Insights website. The report said that the Nigerian government sought to terminate the MoU that governs the production of onshore oil in Nigeria. The MoU ensured that a minimum profit of $2.50 per barrel was paid to the government, no matter how low the prices of oil get. There was no maximum cap, but future explorations were assured of a tax rate of 65.75%, lower than the 85% for projects that were already in production. Under the Petroleum Profits Tax Act, the tax rate is 85% on all chargeable income; the MoU was supposed to serve as a tax incentive. A letter was written to Shell about this, telling the company that the MoU was going to be replaced with a standard tax plan.
The website also reported that the NNPC said, in January, that it was going to renegotiate the details of its joint ventures, ventures like SPDC in which the NNPC owns 55% and Shell 30%.
So I still don’t understand the structure of the Nigerian oil industry, and it doesn’t seem like the chair of the House committee on the upstream oil industry, Mr Tam Brisibe, does. The fact that these two reports – one from a Nigerian newspaper quoting Mr Brisibe, and another from an industry magazine/website – are conflicting makes it even more confusing. I hope that the investigation of the House committee will help throw some light on the issues, and make the most volatile, but yet most lucrative, industry in the country a little bit more accessible to curious members of the public. I will try to follow the story.