Last Update: 5:14 AM ET Jun 12, 2006
LAGOS (MarketWatch) — The Nigerian government is demanding the payment of royalties on Bonga field, the deepwater block operated by Shell Nigeria Exploration and Production Company, or Snepco, a senior government official said Friday.
“The royalty due to the government has to be paid,” Tony Chukwueke, head of the Department of Petroleum Resources, regulator of the Nigerian oil and gas industry, said on the sidelines of an industry event. Chukwueke said the government had been in discussions with the operator of the field.
He said the only revenue the government has received from the field so far was the $30 million signature bonus paid when the Snepco won the field in 1992.
Snepco developed the field under a joint venture agreement that allows the operator to recoup its costs through oil sales.
But the government, according to Chukwueke, feels this is an unfair arrangement given the high price of crude oil. “This was good for the nation when the price of oil was low,” he said.
“We are still trying to determine the cost of the project, and we want them to come up with a cost that is acceptable to the government,” he said. “I want to measure the cost of the project in dollars, not in barrels of crude oil.”
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