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Journal of Business and Management Sciences. 2014, 2(2), 35-44
DOI: 10.12691/JBMS-2-2-2
Original Research

Production Sharing or Joint Venturing: What Is the Optimum Petroleum Contractual Arrangement for the Exploitation of Nigeria Oil and Gas?

SANI SAIDU1, and HAMIDU ABUBAKAR SADIQ1

1Aberdeen Business School, Robert Gordon University, United Kingdom

Pub. Date: July 10, 2014
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Cite this paper

SANI SAIDU and HAMIDU ABUBAKAR SADIQ. Production Sharing or Joint Venturing: What Is the Optimum Petroleum Contractual Arrangement for the Exploitation of Nigeria Oil and Gas?. Journal of Business and Management Sciences. 2014; 2(2):35-44. doi: 10.12691/JBMS-2-2-2

Abstract

Over time, stakeholders in the Nigerian oil and gas industry have been experimenting different contractual arrangement with the view of coming up with a best contractual arrangement for the industry. However, any shift from one contractual arrangement to another may affect the revenue generation position of the government and investments potentialities of the foreign oil companies. Similarly, the growing concern ranging from challenges of sustainability to transparency and accountability of transactions in the industry put the contractual arrangements on which the industry operates under question. Therefore, this study is aimed at finding out which among joint venture (JV) and production sharing contract (PSC) is optimal for exploitation of the Nigerian oil and gas industry in terms of economic rent, transparency and accountability derivable from the contract. Using contractual elements, pattern-matching and content analysis was used as the main techniques in analysing data. The results of the study have proved JV optimal in terms of economic rent, while PSC was found optimal in terms of accountability and transparency. On the overall, the results proved JV as optimal for the stakeholders in the Nigerian oil and gas industry. The study recommends government to place more emphasis on JVs in the industry, increase efforts towards fight against corruption in its agencies and officials, and increase the disclosure requirements of both its agencies and other operators in the industry particularly on those aspects of the processes that are more prone to corruption. Lastly, the FOCs operating in the industry should embrace and implement internationally acceptable good industry practices.

Keywords

joint venture arrangement, production sharing contract

Copyright

Creative CommonsThis work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

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