COMPARATIVE ANALYSIS OF PRODUCTION SHARING CONTRACT IN THE NIGERIAN AND MALAYSIAN OIL AND GAS INDUSTRY

Abstract

Concessionary and contractual systems are the regulatory framework that controls the exploration and production of hydrocarbon in different regions. The contractual systems are further divided into production sharing contract and service contracts. Basically, any fiscal systems are designed to optimize maximum benefit to the host government despite the risks under taken by the operator in exploiting and exploring the resources to provide them profitability. Production sharing contracts are known for the complexity in the sharing of production and tax structure which was mainly adopted by developing countries with potential oil reserves. This work therefore attempted to appraise two different climes with similar circumstances but different results and output. Findings have shown that Malaysia gets the highest returns from their production sharing contracts while Nigeria gets the least returns. We highlighted the transparency in the Malaysian oil and gas industry as a catalyst for development as opposed to the vices that bedeviled the Nigerian oil and gas industry. The Methodology used was doctrinal and the approaches adopted are analytical and comparative research garnered from primary and secondary sources such as local and foreign legislations, case laws, textbooks, journals, articles, newspapers, internet materials. The work is extensively comparative in scope, to this end; this work analyzed and compared the rapid growth in the Malaysian oil and gas industry through their production sharing contract in a bid to provoke consciousness amongst the Nigerian government and people to establish high level control over the oil and gas sector thereby enhancing greater output. The researchers discovered that production sharing contract as a contractual arrangement could still be used for socio economic transformation of a nation and its stability and sustainability should be geared towards transforming Nigeria’s oil and gas industry. It is recommended amongst others for the complete over haul of the Regulatory Regime in the Nigerian oil and gas industry.