Nnpc Joint Venture Agreement

Usenu Inifomet[1] Nigerian Petroleum Development Company, Benin City [email protected] A modern concession resembles the traditional concession in many ways. It is also an agreement under which the oil company obtains the exclusive right to explore oil and, when oil is discovered, to produce, market and transport. The company pays certain costs and taxes to the state that has crude oil. Under this type of concession, the company has rights to the oil produced and holds it from the date of extraction. It is now mentioned by different names, such as license or leasing, but it is still the most commonly used type of agreement. The initial period is usually 20 years. Coverage has also been reduced. The company generally only gets rights to crude oil and sometimes natural gas. Oil remains the property of the state in almost all such agreements at any given time. The Joint Operating Agreement (JOA) is a participation agreement that allows the federal government, represented by the Nigerian National Petroleum Corporation (NNPC), to actively participate in the Nigerian oil industry.

The objective of the JOA is to allow the federal government to exercise control over its natural resources and to obtain, as part of its participation, maximum economic returns from the oil industry. (a) the federal government`s participation in the transaction to which the licence or lease relates on terms to be negotiated between the Minister and the applicant for the licence or lease; and the operator`s distance rights are strictly limited. An operator may only be removed from non-operators for “good reasons” by the “yes” of a majority stake (on the basis of ownership) after excluding the operator`s right to vote. Such a vote is considered effective only when an operator has not provided the operator with a written notification detailing the alleged default and if the operator has not cured the failure. “Good cause” for these purposes refers to gross negligence or intentional misconduct, substantial breach or inability to comply with the operating standards contained in the contract, or material failure or inability to discharge its obligations under the contract.