The PSC is today the toast of the Nigerian Petroleum industry. It is an agreement born in response to the funding problems faced by the old JV arrangement as well as the desire of government to open up the sector for more foreign participation.

The PSC arrangement governs the understanding between the NNPC and all new participants in the new inland deep ultra deep water acreages. Its main features are:
The contractor bears all costs of exploration and production without such costs being re-imburseable if he no find is made in the acreage.
Cost is recoverable with crude oil in the event of commercial find, with provisions made for:
(i) Tax Oil: This is to offset actual Tax, Royalty and Concession Rentals due and payable/deductible in full in the year.
(ii) Cost Oil: To reimburse the contractor for capital investments and operating costs.
(iii) Profit Oil: The balance after deduction of Tax Oil and Cost Oil, which is to be shared between the NNPC and the contractor in an agreed proportion.

Currently, Statoil, Snepco, Esso, Elf, Nigerian Agip Exploration Limited, Addax, Conoco and Petrobas, Star Deep Water, Chevron, Oranto Phillips are operating the PSC in the country.