According to a 2021 oil and gas industry report by the Nigeria Extractive Industries Transparency Initiative, 23 oil blocks managed by both international and local oil firms were either inactive or failed to produce in 2021.
These oil blocks operate under crude oil Production Sharing Contracts with the Nigerian National Petroleum Company Limited.
In a PSC arrangement, contracted oil companies fund operations to explore, develop, and produce petroleum within a concession area. If successful, the company pays various fees to the government, including Petroleum Profit Tax, royalty, and other bonuses.
The company can also recover its costs through ‘Cost Oil.’
The NEITI report revealed that only 12 of the PSC oil blocks were productive in 2021, while the remaining 17 blocks did not produce any crude.
Additionally, six blocks were categorized as inactive, bringing the total number of non-producing or inactive oil blocks to 26.
Several notable PSC contractors, including Esso E&P, Nigerian Agip Exploration, Shell Nigeria Exploration and Production Company, Texaco Nigeria Outer Shelf Limited, Star Deep Water Petroleum Limited, and Statoil Nigeria Limited, among others, did not produce crude from selected blocks.
The report also highlighted six inactive PSC blocks managed by companies like GEC Petroleum Development Company Limited, Nigerian Agip Oil Company, Monipulo Limited, and Esso Exploration and Production Limited.
NNPCL responded to these findings by explaining that “PSC blocks transit from exploration/appraisal phase to production overtime” and that “some of the blocks are still at award status as some contractors may not have come forward for budget/work programmes due to various reasons from regulatory to business operations’ considerations.”
The national oil firm expressed hope that about two to three blocks will soon attain production status.
