ABSTRACT
Oil and gas exploration and production has long been a global business. Investors in the industry, especially the IOCs, have ventured into extremely challenging terrains to explore for oil and gas and one of the major enabling factors has been technological innovation which is derived from huge investments in research and development. Cutting edge technology greatly enhances exploration and production activities but it is often obtained at a premium. This adds to the cost elements of upstream activities and as a result deflates the expected profit accruing to IOCs. In entering into a Memorandum of Understanding (MOU) with an NOC, the IOCs are aware of the risks involved and for that reason expect reasonable returns on their investments. Oil and gas are the mainstay of Nigerian economy, accounting for about 80 per cent and 30 per cent of the nation’s foreign earnings and of the GDP respectively. In consideration of the pivotal roles of oil and gas, the federal government is favourably disposed to creating an enabling environment as well as providing appropriate incentives for IOCs. Such incentives are designed to encourage the companies to commit funds and other related resources in the exploration and production business.
