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FG To Earn N2.94bn From Chevron’s N9.6bn Drilling Contract

The Federal Government will earn $18.4 million, about N2.94 billion, as taxes from Chevron Nigeria Limited’s $481.6 million two-year contract with Pacific Drilling.

President of Nigeria: President Goodluck Jonathan
President Goodluck Jonathan

Also, Pacific Drilling is expected to reap $156 million (N24.96 billion) annually, about $39 million (N6.24 billion) per quarter, after deducting costs and taxes from the deal.

According to documents from Pacific Drilling, it has entered into a two-year contract with Chevron Nigeria, which required it to deploy its newest drillship, the Pacific Khamsin, with Chevron expecting to pay the company $660,000, about N105.6 million daily, translating to about $60.2 million (N9.632 billion) per quarter for the services of the company.

Pacific Drilling further projected a tax rate of four per cent per quarter, meaning that the Federal Government of Nigeria will earn about $2.3 million (N368 million) per quarter, translating to $18.4 million, about N2.94 billion, in the two-year life of the initial contract.

According to the company, the rig was originally expected to begin its work on its first contract on December 1, but it was unable to begin on time due to delay by Nigerian authorities to issue a drilling permit.

Pacific Drilling stated that in the third quarter of 2013, its drilling operations had direct rig operating expenses of $163,400 (N26.144) per day, adding that this can in some cases, increase to approximately $180,000 per day to operate one of its rigs.

Source: Vanguard

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