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| Nigeria
and oil majors at crossroads over profit  28th September, 2001. Disagreement between the Nigerian government and oil multinationals over the sharing of profit has blocked the signing of production contracts, nine months after the country allocated key oil exploration and development blocks. Industry officials said yesterday the impasse had put in doubt any bidding this year for new oil blocks, which are central to Nigeria's plan to double crude oil output and reserves in 10 years. "Nobody has signed as there is no agreement on profit sharing," said an official of one of 14 firms allocated blocks in December. A spokesperson for the state-run Nigerian National Petroleum Corporation, which produces Nigeria's oil in joint ventures with six oil multinationals, confirmed that negotiations had stalled over the sharing of profit oil. Profit oil is crude oil split between the state corporation and the oil companies, net of investment costs, royalties and taxes paid by the companies. "We are insisting on a profit sharing ratio of 70:30 in favour of the oil companies," the corporation spokesperson said. Oil firms initially demanded a ratio of 80:20, which was the formula used in the last production sharing contract in 1993 and which was the basis for their bids for blocks allocated last December. Industry sources said the companies had come down to 75:25 but this had not been accepted by the corporation. But the corporation spokesperson said two multinationals were close to signing production sharing contracts. |
