Why FG can’t recover $62bn from int’l oil companies- Petroleum Resources minister

By Johnbosco Agbakwuru, ABUJA

Minister of State for Petroleum Resources, Mr. Timipre Sylva, said yesterday that it was impossible for the Federal Government to recover a total $62 billon from International Oil Companies, IOCs, being revenue lost to oil exploration since 2003.

Timipre Sylva

The minister stated this while fielding questions from State House correspondents at the end of the Federal Executive Council, FEC, meeting presided over by President Muhammadu Buhari at the Council Chamber, Presidential Villa, Abuja.

Recall that the Federal Government, through the Office of the Attorney-General of the Federation, AGF, had written to oil companies, demanding various sums of money from them on the basis of an October 17, 2018, judgment of the Supreme Court.

The apex court had in the said judgment, ordered the Federal Government to immediately take steps to recover all revenues lost to oil-exploring and exploiting companies due to wrong profit-sharing formula since August 2003.

About five suits are currently before the Abuja and Lagos divisions of the Federal High Court stalling the Federal Government’s move to recover about $62billion from international oil companies.

Speaking on the development as it relates to the judgment, the Minister said the federal government had started discussions on the matter.

He said: “Well, we have started discussions. Let us consider that as a lost opportunity, the money was not in a cupboard, they have taken it. Nobody can bring out that kind of money, I mean we can’t get $62billion.

“We can maybe get something from them but not $62billion. It’s an opportunity we have lost. We have already started discussions with them but what is clear is that it is a lost opportunity really.”

Sylva further explained that the existing Deep Offshore Act in the country which is very old, was part of the problem and needed to the repealed if the government could get it right in terms of Production Sharing Contracts with the oil majors.

“Most of these laws are old already and they need to be amended. The amendment of these bills really portends a lot for us. 

There are a lot of missed opportunities already. The previous law provided that when oil prices went beyond twenty dollars, we are supposed to negotiate and get some additional revenues.

“We didn’t take advantage of that and, of course, when we approached the oil companies, they said look, this is a lost opportunity, it’s not lost money because this money is not just there, it is not being kept in some cupboard.

“So, it is a lost opportunity, we have to do something quickly to ensure that we don’t lose this opportunity in the future. 

That is why we have to ensure that this bill is passed. With this bill now, there will be some adjustments in the fiscal regime and we believe that the government will get a lot from the oil companies, especially their deep shore exploration activities.

“You know that the PSCs means that they invest the money, they recover their cost before the government begins to get some revenues from it. Unfortunately, each time they keep investing, they keep recovering.

“So, if you don’t take time, you never really get to the point where you benefit at all because the oil companies are perpetually recovering cost. So, with the Deep Offshore Act Amendment, all those things are taken care of.”

Asked if such laws will take a retroactive measure, the minister explained: “The amendment of the bill cannot be retroactive.

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Laws cannot be retroactive, we have to look forward.”