Nigerian Legislation

The Federal Military Government hereby decrees as follows: 

1.     Notwithstanding anything to the contrary contained in any other enactment or law, the provisions of this Decree shall apply to all Production Sharing Contracts as defined in section 18 of this Decree.

2.     The duration of an oil prospecting licence relating to in the Deep Offshore and Inland prospecting licence Basin shall be determined by the Minister and shall be for a minimum period of 5 years and an aggregate period of 10 years.

Provided that the Petroleum Profits Tax applicable to the contract area as defined in the Production Sharing Contracts shall be 50 per cent flat

rate of chargeable profits for the duration of the Production Sharing Contracts.

5.    (1)     The payment of royalty in respect of the Deep Offshore Production Sharing Contracts shall be graduated as follows, that is –

6.     Computation and payment of estimated and final petroleum profit tax shall be made in US dollars on the basis of the US Dollar returns filed.

8.     (1)     Cost oil shall be allocated to the Contractor in such quantum as shall. generate an amount of proceeds sufficient for the recovery of operating costs in oil prospecting licences as defined in the Production Sharing Contracts and any oil mining leases derived therefrom.

12.           The chargeable tax on petroleum operations in the contract area under the Production Sharing Contracts shall be split between the Corporation or the Holder and the Contractor in the operations. same ratio as the split of profit oil as defined in the Production Sharing Contract between them.

13.     (1)          The realisable price as defined in the Production Sharing Contract established by the Corporation or the Holder in accordance with the provisions of the Production Sharing Contract, in respect of crude oil, etc. shall be used to determine the amount payable on royalty and petroleum profit tax in respect of crude oil produced and lifted pursuant to the Production Sharing Contract.

14.             The Corporation or the Holder, as the case may be, shall make available to the Contractor copies of the receipts issued by the Service bearing the names of each Party as defined in the Production Sharing Contract in accordance with each Party's tax oil allocation for the payment of petroleum profit tax under the provisions of the Production Sharing Contract.

15.      (1)        The relevant provisions of all existing enactments or law, including but not limited to the Petroleum Act, as amended, and the Petroleum Profit Tax Act, as amended, shall be read with such modifications as to bring them into conformity with the provisions of this Decree.

    (2)         If the provisions of any other enactment or law, including but not limited to the. enactments specified in subsection (1) of this section, are inconsistent with the provisions of this Decree, the provisions of this Decree shall prevail and the provisions of that other enactment or law shall, to -the extent of that inconsistency, be void.

16.        (1)       For the purpose of the efficient management of Production Sharing Contracts and joint ventures under this Decree, the National Petroleum Investment Management Services (in this Decree referred to as "NAPIMS') shall be incorporated into a limited liability company under the Companies and Allied Matters Decree 1990, as amended.

    (2)         Accordingly, NAPIMS shall be vested with the exploration and production properties and assets owned by the Federal Republic of Nigeria for the purposes of this Decree.

17.            The provisions of this Decree shall be liable to review after a period of 10 years from the date of the commencement and every 5 years immediately thereafter.

18.            In this Decree, unless the context otherwise requires –

"Corporation" means the Nigerian National Petroleum Corporation;

"Contractor" means any petroleum exploration and production company who has entered into a Production Sharing Contract agreement with the Corporation or entered into an agreement or arrangement with any Nigerian Holder of an oil prospecting licence or an oil mining lease within the Deep Offshore and Inland Basin;

"Deep Offshore" means any water depth beyond 200 metres;

"Holder" means any Nigerian company who holds an oil prospecting license or oil mining lease situated within the Deep Offshore and Inland Basin under the relevant provision of the Petroleum Act, as amended;

'Inland Basin" means any of the following Basins, namely, Anambra, Benin, Benue, Chad, Gongola, Sokoto and such other basins as may be determined, from time to time, by the Minister;

"Joint Ventures" means any agreement or arrangements under which the Corporation jointly owns and develops various oil and gas concessions in Nigeria;

"Minister" means the Minister charged with responsibility for matters relating to petroleum and "Ministry" shall be construed accordingly;

"Parties" includes the Corporation or any Nigerian company as the Holder and the Contractor;

"Production Sharing Contracts" means any agreement or Any arrangements made between the Corporation or the Holder and any other petroleum exploration and production company or companies for the purpose of exploration and production of oil in the Deep Offshore and. Inland Basins;

"Service" means the Federal Inland Revenue Service.

19.            This Decree may be cited as the Deep Offshore and Inland Basin Production Sharing Contracts Decree 1999 and shall be deemed to have come into force on 1^st January, 1993.