THE EFFECTIVENESS OF THE JOINT OPERATING AGREEMENTS AND PRODUCTION SHARING AGREEMENTS IN THE OIL AND GAS INDUSTRY IN NIGE RIA

The significance of oil and gas production to the Nigerian economy cannot be overemphasized. It can rightly be said that it is the economic strength of the country. The recent fall in the price of oil internationally has further exposed and strengthened this claim. There is no doubt that Nigeria today is being faced with economic recession as a result. Earlier concessionary period of the oil and gas exploration and production in Nigeria has left the country in deeper search of other lucrative ways to gain more control of its oil and gas which were dominantly controlled by the international oil companies. Different contractual arrangements were brought to the fore. Most notable amongst them were the Joint Operating Agreements (JOAs) and Production Sharing Agreements (PSAs). At the beginning, the JOAs were actually the preferred forms of contractual agreements between the industry players. However, there seem to be a shift from JOAs to PSAs. The reason behind the shift is not farfetched. It has been said that there are difficulties associated with the JOAs as a result of some of its features hence, the preference of the PSAs as contractual regime by developing countries; Nigeria inclusive. This research work examines the effectiveness of the two fiscal regimes while discussing their individual features. This would help elicit the reason why the PSAs are preferred over the JOAs.