Nigeria announces significant changes to oil business regime

Presenting an overview of the country's 1998 budget in Abuja, Finance Minister Anthony Ani announced four significant changes to the way oil companies do business in Nigeria.
The first is that the Nigerian government has directed multinational oil companies operating in the country to relinquish fields which they cannot operate profitably.
Also included is a modification in the procedure for calculating and collecting tax revenue from the companies. Additionally, fabrication works by the operating companies must have at least 30 % local content.
Finally, Ani said the government's fiscal burden would be reduced through the adoption of production-sharing contracts, under the terms of which the operators bear all the investment risks and share the proceeds at agreed percentages with the government after recouping their costs.
The question of marginal oil fields has been the source of a continuing dispute between the government and the companies for the past year and a half.
Nigeria's marginal fields are believed to contain more than 2.3 bn barrels of crude.
The government had previously sought to recover the fields, but the companies insisted that the fields were not "marginal" and had not been developed largely due to lack of funds and output restrictions imposed by the nation's OPEC quota.
The second change announced by Ani was that calculations and collection of petroleum profit taxes and royalties payable by the companies shall now be jointly co-ordinated by four organisations.
The bodies to be involved are the Federal Inland Revenue Service, the Department of Petroleum Resources, the Nigerian National Petroleum Corporation (NNPC) and the Central Bank of Nigeria.